The International Monetary Fund raised its 2026 growth forecast for Latin America and the Caribbean by a tenth of a percentage point to 2.3% on April 14, while cautioning that the economic consequences of the war in the Middle East will weigh most heavily on the region's smaller economies.

The Washington-based lender, presenting its World Economic Outlook at its spring meetings, projected that regional growth would pick up to 2.7% in 2027, unchanged from its January estimate. The modest upward revision sits against a more pessimistic global backdrop: the IMF cut its world growth forecast to 3.1% from 3.3%, citing the conflict's energy shock and assuming both a relatively short war and only a moderate rise in energy prices this year.

"The impact of the conflict in the Middle East will be heterogeneous in the region, with more negative effects on smaller economies," the WEO stated.

"This latest shock comes less than a year since the shift in US trade policies, and the transition to a new international trade system is still ongoing.”

Country trajectories within the region diverge sharply. Brazil emerges as a relative near-term beneficiary, with the fund lifting its 2026 growth projection to 1.9% — up from 1.6% in January — on the basis that the country is a net energy exporter. Petya Koeva-Brooks, deputy director of the IMF's research department, added at a press conference that Brazil's large share of renewable energy in its electricity mix provided a further buffer. For 2027, however, the fund revised its forecast down to 2% from 2.3%, projecting that a deceleration in global demand, higher input costs including fertilisers, and tighter financial conditions would act as a drag. A flexible exchange rate, adequate foreign reserves, and limited exposure to external-currency borrowing were cited as factors that would help cushion those headwinds.

Mexico, which expanded just 0.6% in 2025 following US tariffs, trade tensions, fiscal consolidation, and a restrictive monetary stance, is forecast to recover to 1.6% this year and 2.2% in 2027. Argentina, advancing through a wide-ranging reform programme, is projected to grow 3.5% in 2026 and 4% in 2027 — a slowdown from 4.4% last year that Koeva-Brooks attributed in part to a softening in economic activity in the second half of 2025. The country's disinflation drive continues to show results, with inflation forecast to decline to 30.4% in 2026 and 15.7% in 2027.

Venezuela, where Nicolás Maduro was removed from the presidency following his capture in January and replaced by acting president Delcy Rodriguez under US tutelage, is projected to grow 4% this year and 6% in 2027, underpinned by oil sector reactivation and the broader disruption to Gulf energy markets. The fund nonetheless forecasts Venezuelan inflation at 387% in 2026, well above the 252% recorded in 2025. At the other extreme, Bolivia's GDP is forecast to contract 3.3% this year after shrinking 1.2% in 2025.

Colombia is projected to expand 2.3% this year and 2.5% in 2027; Chile 2.4% and 2.6%; Peru 2.8% in both years; Ecuador 2.5% in both years. Paraguay leads the region's mid-tier performers at 4.2% in 2026. The Caribbean posts the strongest subregional numbers — 5.7% in 2026 and 8.6% in 2027 — while Central America is forecast to grow 3.7% this year and 4% next.

The IMF's regional outlook is marginally more optimistic than a World Bank assessment published last week, which projected Latin American and Caribbean growth of 2.1% in 2026, citing weak investment, tight fiscal space, and inflationary pressures from the Middle East conflict as the main constraints.