Latin America 2025 Outlook
Key Trends to Watch
Table of contents
As Latin America steps into 2025, the region faces a mix of challenges and opportunities shaped by shifting geopolitical landscapes, economic recalibrations, and pressing social issues. The return of Donald Trump to the U.S. presidency, ongoing migration crises, and the growing impact of climate change are just some of the factors redefining the political and economic environment.
This outlook highlights the key trends to watch across geopolitics, economics, and innovation, offering a roadmap for understanding the region’s future trajectory.
🌎 Geopolitical Shifts : Trump’s Return and Regional Dynamics
Trump’s Influence on the Region : The return of Donald Trump to the U.S. presidency marks a significant geopolitical shift for Latin America in 2025. After several decades of being “neglected”, Latin America could become a top priority for Washington. During his previous term, Trump’s policies emphasized border security, protectionist trade measures, and heightened diplomatic pressure on nations like Venezuela. These actions left a legacy of strained relations with several Latin American countries, setting the stage for renewed tensions and policy confrontations in his current term. Mexico is at the forefront of these changes, grappling with heightened demands on border security, migration management, and trade relations. The Trump administration's focus on countering China’s growing influence in the region further complicates matters, especially for countries like Colombia, which recently joined the Belt and Road Initiative. Migration emerges as a lens through which many of these regional issues are framed, including Venezuela’s ongoing political crisis and Mexico’s strained ties with Washington.
Left-Right Divide: Political fragmentation remains a defining feature of the region. These ideological contrasts complicate regional cooperation and hinder consensus on critical issues like trade and climate policy. Right-leaning governments, such as those in El Salvador and Paraguay, align more closely with Trump’s policies, while leftist administrations in Colombia, Brazil, and Chile face increased scrutiny and pressure. The Venezuelan political crisis highlighted the contradictions of Latin America’s “old left”, (Lula in Brazil, Petro in Colombia, AMLO in Mexico) as it failed to clearly condemn Nicolas Maduro’s regime. In 2025 several elections will take place and could threaten to further weaken leftist parties.
ℹ️ See the “Elections Calendar” section below for a breakdown of the different elections.
Key Leadership Challenges: In Mexico, President Claudia Sheinbaum faces pressure to bolster security measures amid rising crime and U.S. demands for stronger action against organized crime. She also contends with challenges surrounding mass deportations and potential economic instability tied to U.S.-Mexico relations. Argentina’s President Javier Milei navigates economic stabilization and fiscal reforms, with aspirations for stronger ties with the U.S., but will also be campaigning for mid-term elections. Meanwhile, Venezuela’s leadership under Nicolás Maduro faces intensifying international scrutiny as political unrest continues, with the opposition disputing the legitimacy of Maduro’s re-election and promising alternative leadership. Edmundo Gonzalez, head of the opposition and self-proclaimed winner of the election, plans to come back to Venezuela on January 10th for the presidential investiture, with the intention of being sworn-in.
📈 Economic Outlook: Growth, Nearshoring, and Migration
Regional Growth: The regional outlook for 2025 reflects uneven recovery patterns across Latin America, shaped by varying economic policies and external pressures. South America is expected to perform better than Central America and Mexico, driven by strong commodity exports and investment in energy projects. Argentina is forecasted to lead the region with a robust 4.3% growth, mainly due to key investments in the Vaca Muerta shale formation and fiscal reforms. Brazil will experience stable growth fueled by consumption and commodities, although fiscal concerns and inflation pressures persist. On the other hand, Mexico is projected to stagnate at 1.2% growth, hindered by fiscal challenges, declining investor confidence, and strained U.S. trade relations.
ℹ️ For a breakdown of the main Latin American economies, see the “Country Snapshot” section below
Nearshoring Opportunities: The global trend toward nearshoring, driven by U.S.-China trade tensions, presents significant opportunities for Mexico and Central America. Sectors like automotive manufacturing and steel are attracting investments as companies seek to diversify supply chains. However, infrastructure gaps, workforce skills, and regulatory hurdles remain challenges that must be addressed for sustained success. Mexico has imposed tariffs on Chinese goods to prevent misuse of trade routes, highlighting the complexities of managing nearshoring dynamics.
Migration Impact: Venezuelan migration continues to reshape labor markets across the region. Countries like Colombia and Peru have seen an influx of migrants, which presents both challenges and opportunities. While migration strains public services and resources, it also contributes to economic activity by expanding the labor force. In the long term, integrating migrants into the workforce could provide a boost to local economies if managed effectively.
🌱 Resilience and Innovation: Climate and Tech Leadership
Climate Adaptation: Latin America faces increasing climate risks, from severe droughts in the Southern Cone to intensified hurricane seasons in the Caribbean. Ecuador has taken a leading role in innovative climate financing through its debt-for-nature swap, which allocates $460 million to Amazon conservation under the Amazon Biocorridor Program. This initiative aims to protect millions of hectares of forests and rivers while promoting biodiversity and supporting local communities. Similar initiatives are crucial for enhancing regional resilience and balancing economic growth with environmental sustainability.
Tech Hubs: Latin America’s tech sector is growing rapidly, with cities like Guadalajara, Medellín, and São Paulo leading the way. These hubs are focusing on areas such as artificial intelligence, fintech, and renewable energy, with governments encouraging innovation through public-private partnerships. The rise of these tech ecosystems presents opportunities for job creation, economic diversification, and solutions to pressing local challenges. Additionally, tech startups in the region are increasingly prioritizing sustainable practices and green technologies to address climate issues.
Opportunities Amid Uncertainty: Regional partnerships, such as Brazil’s Tropical Forest Finance Facility, showcase how collaboration can attract sustainable investments and enhance climate resilience. These partnerships aim to mobilize both public and private funds to support conservation efforts and address socio-economic vulnerabilities. The growing interest in sustainable finance and tech-driven solutions presents a pathway for Latin America to build resilience against global uncertainties and achieve long-term inclusive growth.
What are your thoughts on the trends or events that will shape the year 2025 in Latin America ?
🔎 Country Snapshots
🇦🇷 Argentina: A robust recovery is anticipated, with a forecasted growth rate of 4.3%. President Javier Milei’s government has successfully implemented disinflation measures, stabilizing the economy. Key investments in the energy sector, particularly the Vaca Muerta shale formation, are expected to drive growth. However, fiscal reforms and negotiations with the IMF remain critical to sustaining long-term stability.
🇧🇷 Brazil: The country is expected to experience stable growth (2.3%) driven by strong domestic consumption and resilient commodity exports. However, fiscal concerns remain, particularly regarding the government’s ability to reduce its budget deficit. Inflationary pressures have also prompted the central bank to maintain high interest rates. Additionally, environmental policies and international climate commitments will be key areas of focus as Brazil hosts the COP30 summit in Belém.
🇨🇱 Chile: Political stabilization has improved investor confidence. The country is advancing in technology and renewable energy sectors, positioning itself as a leader in responsible AI and climate solutions. However, economic growth remains moderate at 2.2%, and Chile faces challenges in maintaining social cohesion amid ongoing reforms and demands for greater equity.
🇨🇴 Colombia: The country is expected to recover with a 2.6% GDP growth, bolstered by nearshoring trends, infrastructure projects, and efforts to diversify exports. However, President Gustavo Petro’s drug and security policies continue to cause friction with the U.S., especially under the Trump administration’s hardline stance on organized crime. Colombia’s participation in the Belt and Road Initiative is also reshaping its trade partnerships.
🇲🇽 Mexico: Despite nearshoring opportunities, growth is expected to stagnate at 1.2% due to fiscal slippage and declining investor confidence. President Claudia Sheinbaum faces pressures from the U.S. to address security and migration issues, while managing internal economic challenges. Recent U.S. protectionist measures have further complicated trade dynamics, particularly in sectors like steel and automotive manufacturing.
🗳️ Elections Calendar
Ecuador (February 9 & April 13 - Presidential)
Ecuador will hold a highly anticipated election, with President Daniel Noboa seeking re-election after a brief term following Guillermo Lasso’s resignation. Noboa's focus on reducing violence and economic recovery will be tested against opposition candidate Luisa González, backed by former president Rafael Correa.Bolivia (August 10 & October 19 - Presidential)
Bolivia’s election will be marked by internal tensions within the ruling MAS party, with current President Luis Arce facing opposition from former ally Evo Morales. A victory for the right-wing could shift Bolivia's international alliances away from China and Russia.Honduras (November 30 - General)
Honduras will elect a new president amid concerns about government integrity and relations with China. The election will shape the country's stance on migration and its diplomatic ties with the U.S.Argentina (October - Midterm Legislative)
Argentina’s midterm elections could strengthen President Javier Milei’s political base, enabling him to push forward his liberal reform agenda without needing coalition support.Chile (December - Presidential)
Chile’s election will likely see a faceoff between conservative Evelyn Matthei and a center-left candidate. The result could realign Chile’s regional alliances, particularly impacting relations with Argentina and the U.S.
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This newsletter synthesizes insights from LATAM’s top publications in four languages—so you get a well-rounded perspective without the language barrier!
Views and opinions expressed in this publication are solely those of the author. They do not represent, and should not be construed as representing, the official positions of the author's current or any previous company.