Oil Shock leads ECLAC to Trim LatAm’s Growth to 2.2%

Economic growth across Latin America and the Caribbean is now projected at 2.2% in 2026, a marginal downgrade from the 2.3% estimate issued in December 2025, according to the Economic Commission for Latin America and the Caribbean.

The UN agency attributes the softer outlook to mounting global pressures, including the ongoing conflict involving Iran and a renewed surge in inflation. In its latest assessment, the Commission noted that growth is expected to slow in 24 of the region’s 33 economies next year, with only seven countries likely to see an acceleration.

Sub-regional trends reflect this moderation. South America is forecast to expand by 2.4% in 2026, down from 2.9% in 2025. In Central America, growth is projected to ease to 2.2% from 2.3%, weighed down primarily by anticipated contractions in Cuba and Haiti. Excluding these two economies, however, the sub-region would post a stronger 3.9% expansion in 2026, slightly above the 3.8% recorded a year earlier.

In the English- and Dutch-speaking Caribbean, output is expected to grow by 5.6% in 2026, marginally higher than 5.5% in 2025, largely driven by robust expansion in Guyana. Without Guyana, regional growth would drop sharply to 1.2%, compared with 2.0% in the previous year.

The report highlights the region’s vulnerability to external shocks, particularly its dependence on imported fuel. The recent escalation in tensions involving Iran has pushed global oil prices up by nearly 75% over the past two months, triggering widespread increases in domestic prices.

This has been further compounded by rising global food costs and slowing economic momentum in key trading partners such as the euro area, China and India.

Despite these headwinds, labor markets have shown some resilience. Job creation is projected at 1.1% in 2026, albeit lower than the 1.5% recorded in 2025.