Georgetown Americas Institute

Growth, External Conditions, and Structural Constraints

Ramos emphasized that Latin America should not be treated as a single macroeconomic unit, arguing that country cases differ significantly in structure and vulnerability. Still, in his view, several regional patterns are discernible heading into 2026. He projected a relatively supportive global backdrop, that is, a backdrop characterized by solid global growth, a weakening U.S. dollar, core rate relief (interest rates in the core economy), low oil prices, dampening effect on inflation, among others. This is matched with a steady—though not spectacular—global growth, easing inflation, and gradual monetary loosening in advanced economies. According to his assessment, lower oil prices and additional interest rate cuts by the U.S. Federal Reserve could help ease financial conditions for emerging markets.

Even under a more favorable external scenario, Ramos argued that Latin America’s core challenge remains modest growth. He observed that the region has been expanding at roughly 2% annually in recent years and is likely to remain near that range, with only limited acceleration. In his view, this pace is insufficient for meaningful income convergence with faster-growing regions. He stressed that weak investment remains a central constraint. Sustainable growth, he argued, depends on higher investment rates, policy credibility, and stronger frameworks that give private investors confidence to commit long-term capital.

“Growth has been, in general, relatively modest, not to call it mediocre. So that means that the region is really not converging, in terms of per capita GDP, with other more dynamic regions in the world and there is only one region that grows less than Latin America, which is Sub-Saharan Africa, and I don’t think that should serve as a template” - Alberto Ramos.  

Ramos reviewed expected performance among the largest regional economies, noting differing trajectories. He anticipated some deceleration in Brazil, a partial recovery from very low growth in Mexico, continued adjustment but ongoing expansion in Argentina, and moderate growth across several other major economies. He also pointed to reduced dispersion in growth outcomes across countries compared to previous years and noted that, in his assessment, fewer economies face outright contraction risk in the near term. Still, he cautioned that regional performance remains vulnerable to shocks and policy slippage.

He also addressed inflation and monetary policy, arguing that many Latin American central banks moved early and aggressively in prior tightening cycles and are now comparatively well positioned. In his view, disinflation progress and credible policy frameworks in several countries create room for gradual interest rate cuts, though he stressed that policymakers must remain data-dependent.

Risks, Policy Tradeoffs, and Investor Confidence

Ramos underscored that fiscal dynamics are becoming more binding across the region. He noted that COVID-19 pandemic-era expansions and rising social demands have left many governments with tighter budget constraints and higher debt burdens. In his assessment, medium-term fiscal consolidation will be necessary in several countries, but politically difficult to implement.

The discussion also examined investor sentiment and capital flows. Ramos suggested that markets were differentiating more sharply across countries based on policy credibility, reform momentum, and institutional strength. He argued that governments pursuing clearer macroeconomic frameworks and structural reforms were more likely to attract stable capital inflows, even in a fragmented global environment. Political cycles, however, introduce uncertainty, and he noted that reform agendas often faced significant implementation risk. Werner and Ramos also touched on external actors and trade reconfiguration. Ramos indicated that shifting supply chains and geopolitical realignment could create selective opportunities for countries able to integrate into new production networks, but he warned that gains would depend on infrastructure, human capital, and regulatory conditions rather than geography alone.

In response to a question on Venezuela, Ramos characterized the country’s trajectory as an extreme case of economic and institutional collapse, pointing to the scale of contraction, hyperinflation, currency depreciation, and mass migration. He noted that Venezuela’s economy had shrunk dramatically from its past size and described the associated humanitarian consequences, including widespread poverty and nutritional stress. Ramos cautioned that future political and economic outcomes remained highly uncertain. 

“What is going to happen in Venezuela we do not know. In our outlook, we are not assuming any spillovers from the situation in Venezuela economically, socially, in terms of migration flows. But it could happen”- Alberto Ramos. 

Q&A Session

During the Q&A, audience members asked about downside risks, including sharper global slowdowns, financial volatility, and domestic political shocks. Ramos responded that while the baseline outlook is relatively stable, tail risks remain significant, particularly if global financial conditions tighten unexpectedly or if major economies underperform. He also addressed questions on specific countries, reiterating that national policy choices and institutional credibility are decisive in shaping outcomes. Additional questions focused on inflation risks, currency pressures, and fiscal reform prospects, with Ramos emphasizing that resilience varies widely and that credible, rules-based policy frameworks remain the strongest buffer against external shocks.