Latin America on the fast track: MAPFRE Economics raises its growth outlook for the region

MAPFRE Economics, the research arm of MAPFRE, has revised its growth forecast for Latin America upward to 1.9% for this year and 2.1% for next year, compared to earlier projections of 1.6% and 1.7%, as detailed in the Economic and Sector Outlook 2025: Forecast Update Towards the Second Quarter.

Eduardo García Castro, senior economist at MAPFRE Economics, attributes this improvement to the potential benefits from redirected capital flows from the United States, which remain a positive catalyst. “Additionally, there is significant interest in resolving tariff issues and establishing negotiation channels,” García Castro notes.  

The tariff policies announced by U.S. President Donald Trump during the so-called “Liberation Day” have reshaped growth expectations for all U.S. trading partners, including Latin American countries. 

According to the World Trade Organization (WTO), “Trade policy uncertainty has become a key factor influencing global trade and investment decisions. Companies making long-term commitments, whether investing in export capacity, entering foreign markets, or building international supply chains, rely on stable and predictable trade policies.” The WTO forecasts a decline in global trade, particularly affecting North America, Asia, and South America.  

MAPFRE Economics believes this situation could also present opportunities. “Although the direction of trade policy suggests lower external demand, which would impact those partners most integrated into U.S. value chains, such as Mexico, these countries could also benefit from both trade redirection and increased capital inflows. This scenario could lead to a monetary policy outlook involving fewer adjustments than initially expected and provide a relatively stable environment,” the MAPFRE research division notes in the report.  

Among the economies analyzed by MAPFRE Economics, Mexico is expected to post the weakest growth, with GDP expanding by just 0.4% this year and 1.5% next year. It is also one of the countries most affected by Donald Trump’s tariff policy. In its baseline scenario, MAPFRE’s research division forecasts export growth of 1.9% for this year, followed by a 2.6% contraction in 2026. As for imports, they are expected to decline by 1.9% in 2025 and by 3.3% the following year. 

“The latest trade data suggest that tariffs have already begun to impact the economy. In this regard, economic activity is likely to continue deteriorating over the course of the year, as the sectors most exposed to tariff effects undergo adjustments to mitigate the negative impact. However, a recession still seems avoidable, particularly if certain trade issues with the U.S. can be resolved,” says García Castro. 

Brazil, meanwhile, is projected to grow by 2% this year, with a slight slowdown to 1.8% in 2026. One of the key challenges facing the country is the trajectory of the Brazilian real. The currency was hit hard last year by the appreciation of the U.S. dollar, compounded by persistent inflation, which is expected to end 2025 at 5.3%, and 2026 at 4.4%. The real has begun to recover, and the dollar’s weakening — a result of U.S. trade policy — will likely have a positive effect on the Brazilian currency. That said, MAPFRE Economics warns that monetary policy will remain cautious, “at least as long as inflation continues to fluctuate at current levels,” with inflation expectations lacking firm anchoring and fiscal risks still looming. 

Argentina is expected to grow by 4.5% this year and 3.3% next year, although it continues to face the highest inflation among the countries studied by MAPFRE Economics. Prices are forecast to rise by 39% in 2025 and 18.5% in 2026. The upward revision to Argentina’s outlook is one of the key factors contributing to improved economic activity across the region, according to García Castro, offsetting, to some extent, the downward adjustments for Brazil and Mexico. 

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