Global scenario and implications for Latam
Latam Economic Outlook | 1
DECEMBER 2025
The global scenario remains positive for Latam. Regarding US growth, despite
unexpected headwinds from higher tariffs, the economy continued to avoid
recession and maintained positive momentum in the third quarter. However, the
labor market has shown clear signs of cooling, with recent gains in output not
translating into job creation. This softening is unusual outside of recessions or early
recoveries, but the adjustment so far has been gradual rather than abrupt, with
hiring weakening even as layoff rates stay low. With GDP growth expected to
remain robust, inflation is likely to stay above the target. However, disinflationary
forces, most notably the continued moderation in housing prices, and the
temporary nature of tariff-related price increases should contribute to a gradual
easing of headline inflation. Additionally, the labor market’s unusual balance may
allow wage growth to cool, reducing the risk of a wage-driven inflation rebound in
the near term. In this scenario, after delivering a new rate cut in December, the Fed
may adopt a cautious and data dependent approach in the next meetings. The
outlook of US, for now, avoiding a recession but at the same time having room for
interest rate cuts is positive for emerging markets. For Latam countries, although
the region is facing higher tariffs, so far, trade patterns remain stable, and growth is
resilient. The best news for the region, however, is related to inflation and monetary
policy. With current inflation decelerating and currencies appreciating due to
weaker dollar, tariffs announcements may prove disinflationary for the region and
the central banks will have more room to cut rates. Finally, despite the limited
impact from tariffs and expectation of lower interest rates, local elections
discussions will become more important in the next months and may bring more
volatility to the region.