Latin America's economy is expected to grow by 2.2% in 2025, according to the latest report by Moody's Analytics, which slightly revises upward its previous forecast for the region. Despite a volatile global outlook and multiple internal challenges, most Latin American countries posted better-than-expected results in the first quarter, prompting a reassessment of the region's short-term prospects.

The most notable case is Argentina, projected to grow by 5.2%, the highest rate in the region. However, this is largely a technical rebound, following two consecutive years of economic contraction (-1.6% in 2023 and -1.7% in 2024). Moody's notes that Argentina began to show signs of recovery at the end of 2024, driven by a stabilization program that sharply reduced inflation and reignited credit growth. While structural imbalances persist, this positive momentum is expected to continue, with projected expansions of 3.5% in both 2026 and 2027.

Peru ranks second, with a forecasted growth of 3.1% in 2025, supported by strong mineral exports, favorable metal prices, stable inflation, and a resilient labor market that boosts private consumption. Moody's projects further growth of 2.9% in 2026 and 3% in 2027.

In Brazil, Latin America's largest economy, GDP is expected to increase by 2.4%, demonstrating resilience amid fiscal constraints and persistent inflation. A robust labor market has sustained private consumption, despite tight monetary policy. Similarly, Chile is also projected to grow by 2.4%, driven by the mining sector, especially copper, which remains at historically high prices.

On the other hand, Mexico faces a much more subdued outlook, with growth of just 0.1% in 2025. This stagnation is attributed to trade policy uncertainty, deep public spending cuts, and a continued slump in investment. Although remittances and social spending have helped stabilize household income and consumption, the collapse of formal employment-a key indicator of investment trends-raises concern.

Uruguay is expected to post growth of 2.1%, while Colombia benefits from declining unemployment and an active private consumption base, despite persistent inflation. In fact, the region's first-quarter performance outpaced expectations, with year-over-year growth reaching 3.1%, compared to the 2.6% originally projected in December. This strong showing prompted Moody's to revise its 2025 regional baseline forecast from 2.1% to 2.2%.

The report also emphasizes the solid performance of the Andean economies. In Chile and Peru, high global commodity prices and more balanced monetary policies have aided recovery. In Colombia, though inflation remains elevated, the drop in unemployment and recovery in consumption support short-term momentum.

Moody's underlines that, despite these positive developments, the region still faces structural challenges: weak investment, fragile fiscal accounts, and heavy dependence on global commodity cycles. Still, the first-half performance and updated projections suggest that Latin America is entering a recovery phase, with some economies showing greater macroeconomic stability and others still struggling to unlock growth.