IMF trims Latin America’s outlook to 2.3% and sharply cuts Argentina’s

The International Monetary Fund has reduced its 2026 growth projection for Latin America and the Caribbean to 2.3%, a tenth of a percent lower than in July, while cutting Argentina's forecast from 3.5% to 2.1%. Chile and Uruguay also experienced significant downward revisions. The IMF attributed Argentina's reduction to slower activity in the third quarter and weaker domestic demand amid tight financial conditions and ongoing economic transformation.

Fund economist Petya Koeva Brooks highlighted these factors in her assessment. The IMF also increased its inflation expectations for the current year to 32.5%, up from 30.4% in April, and for 2027 to 21.2%, from 15.7%. Unemployment forecasts stand at 7.6% and 7.1% for 2026 and 2027, respectively. Argentina's growth forecast for the following year was adjusted from 4% to 3.5%.

Economy Minister Luis Caputo is present at the IMF meetings. Uruguay's growth forecast was reduced by half a point to 1.3%, reflecting the impact of drought on agriculture. Chile witnessed the most substantial adjustment, with its growth projection falling by 1.8 points. Brazil's growth outlook is now 2.2% this year and 1.9% in 2027, a decline of two and three-tenths percent compared to July, due to persistently tight monetary conditions and the withdrawal of fiscal stimulus.

Globally, the IMF anticipates a 2.5% growth rate for the region in 2027 and an inflation rate of 6.8% for this year, excluding Venezuela. Higher energy prices would benefit commodity exporters while disadvantaging importers. The Fund's global growth forecasts are 3.1% for 2026 and 3.4% for 2027, with global inflation projected to rise to 4.7% this year, primarily driven by energy and food price increases.

Oil prices are expected to average $95.74 per barrel in 2026, compared to $67.74 in 2025, and the Strait of Hormuz is anticipated to reopen in March 2027. In the United States, headline inflation is expected to climb to 3.6% this year and decline to 2.8% in 2027, with economic growth projected at 2.3% in both years, fueled by consumption, fiscal policy, and investment in artificial intelligence.

The IMF identifies a prolonged war in the Middle East and a sudden shift in expectations regarding artificial intelligence as the primary risks to global economic stability.