Economic strength: How Latam has become a fundamental partner

In an international context of trade tensions and shifts in the global economic balance, Latin America is beginning to consolidate itself as a reliable ally.

Currently, the commercial and geopolitical landscape has been one that has generated uncertainty across the hemisphere; old allies are at odds and economic bridges built over decades are tested every day by incompatible political agendas. Nevertheless, Latin America has shown resilience and has grown in recent years despite these circumstances, which is key to a regional macroeconomic recovery.

According to CEPAL (the Economic Commission for Latin America and the Caribbean), Latin America's economic growth is projected at 2.3% for 2026, within a context of moderate but constant recovery. Likewise, the World Bank predicts the region will grow by 2.5% in 2026, thanks to a more resilient internal demand despite global pressures. In its most recent report, the IDB identifies key reforms, productivity, intra-regional integration, labor formalization, and efficient public spending, as the engines to capitalize on the opportunity for sustained growth. Even the OECD reports an increase in trust in public institutions in the region, driven by improvements in integrity and citizen participation.

These factors showcase the potential Latin America has to attract investment and become an ideal partner. It is through the unity of Latin America and the pursuit of common goals that the relationship with countries like the United States can be strengthened, under conditions of parity and joint growth.

The regional landscape: Governance as an engine of stability

One of the greatest promoters of stability in the region has been fiscal reforms and more robust reserves, according to the IDB, which has allowed Latin America to resist external shocks. But beyond this macroeconomic shield, what is truly making a difference is the quality of institutions: more transparent governments, more predictable rules, and an environment more conducive to private investment.

For example, trust in public institutions has been central to turning capital into development. According to an OECD survey, Latin America has recorded increases in citizen trust in government, linked to improvements in accountability and civic participation. When citizens perceive that the rules are clear and applied fairly, it doesn't just increase the legitimacy of the State, it also increases the likelihood that companies will invest securely and for the long term.

Other factors to consider in understanding Latin America’s strong momentum include:

Efficient Capital and Public Spending: The IDB report highlights how improving spending efficiency, for instance, by reducing "leakages" in energy subsidies or improving transparency in public procurement, could free up resources equivalent to as much as 1.8 percentage points of GDP, boosting economic growth.

Fiscal Transparency: The OECD report on tax transparency reflects steady progress in collaboration among Latin American countries to share fiscal information, which strengthens tax collection and reduces evasion.

Innovation and Transformative Production: The OECD's Latin American Economic Outlook 2025 notes that the region can take a productive leap by adopting industrial development policies that are inclusive, low-carbon, and favor both public and private investment.

All of this contributes to a virtuous cycle: more investment, more formal employment, and more sustainable growth. According to Carlos Felipe Jaramillo, the World Bank’s Vice President for Latin America, the region must move forward with “bold and practical reforms that increase productivity and improve the business climate” to generate jobs and opportunities. Furthermore, reports from the IDB and OECD agree that strengthening governance and transparency is not just a moral issue, it is an effective economic strategy, because it:

• Attracts private capital, as investors value the reduction of institutional risk.
• Facilitates domestic financing, since tax collection improves when there is trust in the tax system.
• Stimulates business formalization, because entrepreneurs see a fairer and more stable environment in which to operate.
• Allows for long-term policies, such as productive transformation or green innovation, thanks to durable rules.

Evidence of this can be found in the most recent figures from CEPAL, which report that Foreign Direct Investment (FDI) in Latin America and the Caribbean reached $188.962 billion in 2024, representing a 7.1 % increase over the previous year. A key detail of this report is the role of the United States, which consolidated its position as the largest investor in the region, providing 38% of the total recorded FDI that year.

This strong U.S. participation doesn't just reflect the trust of companies with a historical presence in Latin America; it contributes directly to sustaining regional macroeconomic stability. A large portion of that capital comes from companies already established in the region that decided to reinvest their profits. This reinvestment is particularly valuable because it reinforces existing commercial and productive ties.

Furthermore, U.S. investment in Latin America is diversified: it isn't limited to raw materials, but also drives manufacturing, productive sectors, and energy. This contributes to development, employment, and the modernization of the Latin American economy, turning FDI into a strategic tool, just as CEPAL recommends for more inclusive policies.

The message is clear: governance and transparency are not obstacles to growth, but its very foundation. When countries establish reliable rules and apply them consistently, they create an environment where both citizens and investors participate with confidence.