The Economic Commission for Latin America and the Caribbean (ECLAC) has indicated that the region continues along a path of low growth, forecasting that the main sources that have sustained economic activity in recent years – namely, private consumption and external demand – will lose vitality in 2026.
According to its new estimates, ECLAC projects regional GDP growth of 2.4 per cent in 2025 and 2.3 per cent in 2026.
If these forecasts are borne out, the region would accumulate four consecutive years of low growth with average annual growth of just 2.3 per cent.
At the presentation of its annual report preliminary overview of the Economies of Latin America and the Caribbean 2025, the United Nations regional commission noted that private consumption would lose strength in 2026.
Consumption has been the main driver of economic activity in recent years, accounting for more than half of the growth in regional GDP.
However, ECLAC projects that this contribution will decrease in 2025 and 2026, in a context marked by less dynamic external demand and lower employment growth.
The Caribbean is expected to grow by 5.5 per cent in 2025 and 8.2 per cent in 2026, underpinned by significant growth in oil activity in Guyana, and aided by the normalisation of tourism and an improved performance in the construction sector.
However, this subregion is highly exposed to natural disasters, which constrains its economies’ capacity for growth.
Commenting on the report, economist Dr Vaalmikki Arjoon said this performance reflects a fading post-pandemic rebound, with economic activity driven more by consumption and less by investment and productivity.
At the same time, weaker global growth, trade fragmentation and higher interest costs are weighing on exports, FX earnings and overall fiscal space, despite easing inflation, he added, noting that together, these factors appear to be locking the region into a low-growth equilibrium.
“Indeed, regional fiscal policy is constrained in this environment; high interest costs when repaying current debt, and limited fiscal space for further borrowing, are forcing governments into consolidation that prioritises debt sustainability over growth. Although primary balances have improved in some cases, high interest payments are absorbing revenues and crowding out productive spending on infrastructure, skills, and diversification in the region, risking a self-reinforcing low-growth, high-debt cycle,” Arjoon explained.
In this context, he said T&T’s approach to financing is important.
“Although some borrowing is unavoidable, T&T’s pursuit of non-debt financing sources outlined in the budget, such as a real estate investment trust (REIT) and asset-based bank levy, is economically sound. These measures convert underutilised domestic assets into stable revenue streams, broaden the tax base without worsening inequality, reduce reliance on borrowing, and, if well executed, can strengthen fiscal credibility while preserving space for growth-enhancing investment,” Arjoon further explained.
Noting that for 2026, ECLAC projects modest growth for T&T at 0.9 per cent, while the IMF places it at about 1.2 per cent, Arjoon said however, there is room to outperform these projections if policy shifts decisively toward high-multiplier capital projects, early implementation of the blueprint plan’s diversification measures, and a stronger emphasis on south-south trade relations, where T&T can actively deepen trade, investment and production linkages among developing economies.
Arjoon said this is especially important given the report’s warning about global trade fragmentation, geopolitical uncertainty, and rising transport costs, which could weaken reliance on traditional markets.
He further noted that while near-term growth remains constrained, the outlook improves from 2027, as gas from Manatee, Ginger and Coconut comes onstream, strengthening exports, fiscal revenues, and foreign-exchange inflows.
