Mexico and Brazil to Stall Latin America’s Growth
Argentina could partially offset the regional slowdown, showing signs of recovery despite ongoing challenges.
Quick overview
- Latin America is projected to experience economic stagnation in 2026, with Mexico and Brazil leading the slowdown due to weaker remittances and declining commodity prices.
- Mexico's economic outlook is closely tied to U.S. political and economic cycles, with consumer confidence declining since late 2024.
- Brazil is experiencing modest growth supported by household consumption, but faces a credit slowdown similar to Mexico's due to increased government spending.
- Argentina shows signs of recovery despite challenges, while Chile benefits from stronger copper prices, and Colombia is exposed to fiscal risks and political uncertainty.
Latin America is heading toward a period of economic stagnation in 2026, with diverging performances across the region. Mexico and Brazil are expected to lead the slowdown, weighed down by weaker remittances, softer consumption, and declining commodity prices.
Mexico: dependent on U.S. cycles
Mexico has so far managed to navigate U.S. protectionism, but consumer confidence has fallen since late 2024, following Donald Trump’s election victory. With the scheduled 2026 review of the USMCA (T-MEC), Mexico’s outlook remains closely tied to U.S. political and economic cycles.
Brazil: modest growth at a cost
Brazil continues to post modest but steady growth, supported by household consumption and higher-than-expected government spending. However, the recovery of the real has come at the expense of credit and investment, and the country now faces a credit slowdown similar to Mexico’s.
According to a report by Solunion, with data from Allianz Trade, both Mexico and Brazil will anchor regional stagnation, while other economies show more mixed dynamics. Volatile trade flows and global uncertainty add to the headwinds.
Argentina and Other Key Economies
Argentina
Argentina could partially offset the regional slowdown, showing signs of recovery despite ongoing challenges. Inflation is projected to end 2026 at around 24%. While some indicators point to improvements in consumption and production, the rebound is expected to be gradual and vulnerable to market volatility and international price swings.
Chile
Chile saw a rebound in consumption in 2024, supported by stronger copper prices and relative macroeconomic stability. According to Solunion, these factors position the country to better withstand regional headwinds, though growth is expected to remain moderate.
Colombia
Colombia faces heightened fiscal risk, coupled with political uncertainty and security concerns. Fixed investment remains subdued and is not being offset by stronger consumption, leaving the country more exposed to the broader slowdown in Latin America.
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