Oct 16 (Reuters) - The International Monetary Fund urged Latin American governments on Friday to take advantage of still-favorable global conditions to cut public debt and raise productivity, while it warned that a fiscal adjustment has stalled in many countries.
The fund's Regional Economic Outlook projects Western Hemisphere growth, including the United States and Canada, of 2.2% this year and 2.3% in 2027, a slight deceleration from 2.4% in 2025. For Latin America and the Caribbean, the estimate
was for 2.3% in 2026 and 2.5% in 2027, down 0.1 and 0.2 percentage points from July forecasts.
Nigel Chalk, head of the IMF's Western Hemisphere Department, said in prepared remarks that for the region as a whole "public debt continues to rise," while favorable financing conditions "may not last."
Earlier this week, the fund raised its 2026 world economic growth forecast by 0.1 point from July to 3.1% and left 2027 at 3.4%. Growth in emerging and developing economies, cut 0.1 point in both years, is projected at 3.7% and 4.4%, leaving Latin America and the Caribbean behind.
Strong US demand, high commodity prices, supportive financial conditions and robust tourism and remittances are sustaining economic activity. But they "are not able to resolve the region's fundamental challenges of high public debt and weak productivity growth," the report said.
Staff estimate that better terms of trade and looser financial conditions add about 0.6 percentage point to 2026 growth in Brazil, Chile, Colombia, Mexico and Peru relative to last year. Uncertainty over tariffs and geopolitics partly offsets that expansion.
On Argentina, which saw a large cut to its expected economic expansion, Chalk said data this year have been weaker than the fund expected, but he sees growth rebounding next year.
Countries in Latin America implemented consolidation measures in 2025, the report said, but the adjustment was smaller than envisaged and has stalled "for many" this year. Brazil, Canada and many Caribbean economies are cushioning higher energy prices, counter to fiscal consolidation.
The Fund expects few Latin American countries to move closer to advanced-economy living standards in the next several years. Chalk called the risk of falling further behind "an urgent problem."
Amid the energy and food price surge triggered by the Middle East conflict, inflation should return to target in most countries by the end of 2027, the report said. Risks are tilted to the downside for economic growth and to the upside for inflation, according to the IMF.
(Reporting by Rodrigo Campos in New York; Editing by Andrea Ricci )
