Latin America’s Ongoing Economic Growth Struggles

Latin America is facing significant economic challenges, with Mexico wrestling against growth stagnation reminiscent of the pre-pandemic era. Despite a notable investment boom and robust exports to the United States, the benefits have not reached the broader population. Private consumption remains weak, reflecting trends from before COVID-19.

Mexico’s Economic Position in Latin America

Geographically, Mexico holds a unique position. It shares a border with the U.S. and participates in the United States-Mexico-Canada Agreement (USMCA). This scenario offers Mexico considerable advantages over its Latin American neighbors. However, the stagnation raises alarming questions about the economic prospects for the entire region.

Real Per Capita GDP Trends

Recent analysis reveals unsettling trends in real per capita GDP across Latin America. No country in the region is keeping pace with U.S. growth rates, despite varying levels of development and many nations being significant commodity exporters. This disparity indicates broader governance issues, where wealth concentration among a select elite stifles general economic progress.

Comparative GDP Insights

Looking at per capita GDP in 2010 prices, the trends since 2006 indicate minimal progress for many Latin American countries. While growth data from 2014 to 2024 reveal that the U.S. has achieved a cumulative 20% growth, Latin American countries lag significantly behind. They can be grouped into three categories: countries like Colombia, Peru, and Chile that have shown reasonable progress; Mexico and Brazil, which are falling short; and Ecuador and Argentina, where economic conditions are exacerbated by dollar pegs hindering growth.

The Growth Crisis

Latin America remains entangled in a persistent growth crisis. The situation is especially dire for Mexico and Brazil, both of which have flexible exchange rates. These nations ought to be on a better growth trajectory, yet the current economic landscape suggests otherwise. Addressing the challenges in governance and wealth distribution is essential for breaking this cycle of stagnation and fostering sustainable growth for the region.