Latin America and the Caribbean stand at an uneasy crossroads. After years of steady but uninspiring performance, the region risks locking itself into another decade of weak growth unless it finds a new gear—one powered not by policy tinkering, but by enterprise capable of transformation.
The World Bank’s latest regional outlook warns that growth in 2025 and 2026 will hover around a modest 2.3% and 2.5% respectively—the slowest pace globally. Inflation remains sticky, debt levels have crept upward, and investment continues to underwhelm. Yet amid this grim arithmetic, the Bank’s message is unusually pointed: the region’s future rests in the hands of entrepreneurs bold enough to build beyond survival.
The Region’s Economic Trap
For years, Latin America has been trapped in what economists call a “low dynamism cycle.” Businesses start, but few scale. Governments stabilize, but seldom transform. Meanwhile, debt service costs climb as global credit tightens, crowding out productive spending. Commodity exports—once the region’s lifeline—are projected to lose further value, slashing revenues and sapping investor confidence.
“Stability is not the same as progress,” the report cautions. Without productivity-driven expansion, even well-managed economies risk stagnation.
Why Small Isn’t Enough
Across Latin America and the Caribbean, micro and small firms dominate—often accounting for over two-thirds of all enterprises. But their ability to grow is severely constrained. Red tape, limited financing, outdated infrastructure, and skill shortages form a wall too high for most to climb. The result is a private sector rich in numbers but poor in impact.
A smaller subset of firms, dubbed “transformational enterprises,” shows what’s possible: fast-scaling companies that adopt new technologies, export, and hire aggressively. Yet they remain exceptions, not the rule.
The Rebuild Blueprint
The Bank’s analysis calls for a complete recalibration of how regional economies cultivate growth. Its blueprint rests on three pillars:
- Talent and Capability: Education reform must shift from theory to employable skill. Managerial training, vocational programs, and flexible labor policies are essential to turn potential into performance.
- System Overhaul: Outdated tax codes, inefficient subsidies, and clogged logistics networks choke innovation. Governments must simplify business entry, modernize infrastructure, and create predictability that attracts capital.
- Capital Liberation: Over a quarter of regional firms report being credit-starved. Streamlining financial regulation, expanding venture capital ecosystems, and reforming bankruptcy processes could unleash private investment at scale.
A New Industrial Ambition
The report’s core argument is not merely economic—it’s cultural. Latin America must rediscover its appetite for risk. True recovery will depend less on government transfers and more on founders who dare to build enduring enterprises.
In the past, growth was extracted from natural resources. The next wave must come from intellectual ones: the engineers, coders, and builders who transform the region’s vast human potential into productive power.
If that spark catches, Latin America could rewrite its trajectory—from the world’s slowest-growing region to one of its most resilient. The question is no longer whether it can. It’s whether its leaders will clear the way for those who can.
