Latin America Key themes 2026: Slower trade, sticky prices and policy risk

Below is an abridged view of our 2026 Latin America Key Themes analysis. To view the full report, please complete the form on the right.

2026 Latin America key theme 1

Benign trade outlook despite continued uncertainty around US policy

We expect LatAm’s overall export growth to slow in 2026, but the drag on GDP should be moderate. Most economies in the region will remain broadly insulated from the direct effects of US tariffs, given LatAm countries’ typically weak trade relationships with the US and the fact that most exports from the region are tariff-exempt commodities.

Mexico is the exception. Once the temporary boost from front-loaded US demand fades, its export sector will feel the weight of weaker external conditions more directly.

2026 Latin America key theme 2

Sticky services prices will prevent inflation convergence to targets

Overall weaker aggregate demand and likely sustained disinflation in final and intermediate goods caused by Chinese overproduction should ensure headline inflation returns to or stabilizes within central banks’ target ranges in 2026.

But convergence to target mid-points will be slow.

We expect inflation in Brazil and Mexico to end 2026 very close to the top of target ranges and historical averages, and our expectation of resilient domestic demand in Colombia might prevent headline inflation from falling into the target range at all.

Aside from demand pressure, there are two main obstacles to inflation falling swiftly to the target mid-points. First, services inflation remains stubbornly high. Second, fresh food inflation is likely to rebound in 2026.

2026 Latin America key theme 3

Central banks will focus on growth, meaning more dovish stances

We think most LatAm monetary policymakers will start focusing on lacklustre growth once inflation has stabilized around historical averages, even if it remains above their targets. This means monetary policy could become increasingly accommodative.

Central banks in Brazil and Colombia have the lengthiest rate-cut cycles ahead, whereas Mexico and Chile are closer to their likely neutral rates. We see a rising chance of more cuts than in our baseline.

2026 Latin America key theme 4

Most 2026 budgets won’t stabilize debt ratios

Most 2026 budgets are still in the approval processes, but the targets are broadly realistic and they envisage some additional fiscal consolidation relative to 2025 budgets.

Brazil stands out as a key risk. The October presidential election is likely to lead to higher spending and lower tax collections, further straining fiscal sustainability.

Across the region, our debt-stabilizing primary balance calculations indicate that most countries will struggle to reduce debt ratios in 2026, keeping fiscal-sustainability concerns firmly in focus.

Latin America in 2026: Slower growth, persistent vulnerabilities

Taken together, these themes point to a year of weakening momentum across Latin America. While external conditions are manageable and inflation is less of an immediate threat, domestic demand softness, policy uncertainty and structural fiscal pressures will weigh on performance. Country-specific resilience will hinge on policy credibility, inflation dynamics and exposure to shifts in the global trade environment.

Our report Latin America Key Themes 2026: Slower trade, sticky prices and policy risk, provides deeper insights into these themes and highlights where the major opportunities and risks lie. To request access to the full report, please complete the form.