Latin America at a Turning Point
Argentina, Political Realignment, Economic Reform and the New Competition for Capital
Latin America is entering a new economic and political cycle.
For decades, the region has been characterised by a familiar combination of enormous natural resources, relatively low productivity, political volatility, high inequality and repeated cycles of economic reform followed by policy reversal.
But the environment is changing.
The region is now being reshaped simultaneously by five forces:
the search for macroeconomic stability, the rise of new political movements, the strategic competition between the United States and China, the growing value of critical natural resources, and the increasing importance of security and organised crime.
The economic opportunity is considerable.
So are the risks.
The World Bank currently expects Latin America and the Caribbean to grow only 2.1% in 2026, down from 2.4% in 2025. Weak investment, high real financing costs, uncertainty and difficulties in creating high-quality jobs remain major constraints.
The paradox is that Latin America possesses many of the resources that the global economy increasingly needs.
Copper.
Lithium.
Oil and gas.
Agricultural commodities.
Critical minerals.
Renewable energy potential.
And an increasingly important position between the United States, Europe and Asia.
The problem is not a lack of resources.
The problem is converting resources into sustained productivity, investment and prosperity.
Argentina: the region’s most important economic experiment
No country illustrates Latin America’s transformation better than Argentina.
Argentina has become an extraordinary economic laboratory under President Javier Milei.
The programme is radical, but its initial results cannot simply be dismissed.
Since the Milei administration took office at the end of 2023, annual inflation has fallen dramatically from triple-digit levels, fiscal policy has been fundamentally tightened and the government has achieved two consecutive years of primary fiscal surplus. The IMF also notes significant deregulation, the removal of trade barriers and progress in dismantling foreign-exchange restrictions.