WASHINGTON, United States (CMC) – The World Bank on Wednesday said that economic development in Latin America and the Caribbean (LAC) is projected to grow 2.1 per cent this year, below the 2.4 per cent recorded in 2025.

In its latest Latin America and the Caribbean Economic Update, the Washington-based financial institution said growth for 2027 is projected at 2.4 per cent.

It said the subdued outlook reflects a challenging macroeconomic environment, with high borrowing costs, weak external demand, and inflationary pressures from geopolitical uncertainty damping private investment and job creation.

According to the World Bank, The Bahamas will register growth of 2.2 per cent this year, declining to 1.9 per cent in 2027, while Barbados growth this year is 2.7 per cent increase to three per cent in 2027.

Belize will register economic growth of2.4 per cent this year, decreasing slightly to 2.2 per cent in 2027, while Dominica’s growth of 2.8 per cent this year, will increase slightly to 2.9 the following year.

Grenada’s economic growth of 3.1 per cent this year, will decline slightly to three per cent next year, while Guyana with economic growth of 16.3 per cent this year, will register growth of 23.5 per cent in 2027.

Haiti will have growth of 0.6 per cent this year, climbing to1.9 per cent next year, while Jamaica’s minus one per cent economic decline this year will improve to 3.2 per cent in 2027.

St Lucia will register economic growth of 1.9 per cent this year, declining slightly to 1.8 the following year, while St Vincent and the Grenadines’ economic growth of three per cent this year will be bettered the following year, reaching 3.1 per cent, and Suriname is also expected to register growth moving from four per cent this year to 4.5 per cent in 2027.

Trinidad and Tobago’s economic growth of 0.7 per cent this year will increase to 3.2 per cent next year, according to the World Bank projections.

The report argues that, with the right policies, the region can pivot and harness its natural resources, energy potential, and reform momentum to create quality jobs and foster more inclusive and productive growth.

“Latin America and the Caribbean have the assets—and the reform capacity—to achieve far more. The central ambition should be clear: create quality jobs that power growth and lift productivity,” said Susana Cordeiro Guerra, World Bank vice president for Latin America and the Caribbean.

The World Bank said consumer spending continues to support growth, but only modestly. Investment remains weak, as firms are holding back amid a difficult external environment in which global interest rates are expected to stay high, growth in advanced economies and China is slowing, as well as uncertainty in trade policy.

It said geopolitical tensions, including the conflict in the Middle East, have compounded the challenge, pushing energy prices higher and introducing inflationary risks that could delay monetary easing. These factors place additional pressure on governments already operating under tight fiscal constraints.

According to the World Bank, public debt ratios, though stabilised, remain high by historical standards, and elevated interest payments crowd out spending on infrastructure and social investment, the areas most critical to long-term growth.

Restoring business confidence, unlocking private investment, and raising productivity are essential. The region has strategic strengths to build on: approximately 50 per cent of global lithium reserves, one third of copper, a relatively clean energy mix, and, in several countries, a reform momentum that is gaining ground. Harnessing these assets to boost growth and create quality jobs will require building technical and entrepreneurial foundations for sustained competitiveness.

Across the region, some governments are turning to industrial policy to tap into this potential. The report argues that the effectiveness of any such strategy will depend on getting the basics right first.

“For Latin America and the Caribbean to increase growth and diversify its economies, industrial or productivity policies need to invest in the base: skills, openness, and strong institutions, the conditions that allow firms to place bets, innovate, compete, and grow,” said William Maloney, World Bank Group chief economist for Latin America and the Caribbean.

The report highlights four recommendations to build this base, namely closing skills gaps through education, technical training, and management development; expanding access to finance and strengthening insolvency frameworks so firms can take risks and grow; deepening trade integration to boost competitiveness and technology adoption and building institutional capacity to design policies that can identify market failures, adjust course, and sustain results.