“Though uncertainty round commerce insurance policies has remained excessive and geopolitical tensions continued, international financial exercise has proven notable power within the first half of the yr,” it stated.
In its Regional Financial Outlook: Western Hemisphere – Navigating a Shifting World Surroundings 2025, the IMF famous that whereas commerce coverage turbulence beneath the Trump administration unsettled buyers and prompted temporary spikes in market volatility, the broader influence on progress and commodities was short-lived.
“Key international markets remained comparatively steady, and international progress was sturdy through the first half of 2025. Commerce coverage bulletins triggered a rise in market volatility however didn't have a persistent influence on commodity costs and monetary circumstances,” the report stated.
The research additionally examined how these developments performed out throughout progress, monetary markets, and Latin America and the Caribbean (LAC).
A shifting international setting
The IMF notes that “the worldwide financial system is dealing with vital coverage shifts and chronic shocks.” Central to this has been america, which introduced a sequence of commerce coverage measures that included country- and product-specific tariffs on imports from about 70 nations, some bilateral agreements, a 10-percent common tariff on many items, and sure exemptions.
These actions pushed US import tariffs to ranges not seen since 1930, prompting retaliatory measures from some nations, a few of which have been later reversed, as commerce negotiations unfolded.
The report additionally highlights a shift in immigration insurance policies in superior economies, notably the US, which is prone to dampen web migration flows. Persistent geopolitical conflicts proceed to disrupt commerce and commodity markets, including to the uncertainty. For Latin America and the Caribbean, these international shocks work together with slower progress in giant economies, creating a number of channels of affect.
Markets, volatility, and resilience
Early within the yr, fairness and different asset costs fell, the US greenback depreciated, and commodity costs declined. Nevertheless, circumstances quickly eased: international fairness markets recovered, and commodity costs remained broadly steady round end-2024 ranges.
The report attributes this resilience to a number of elements: accommodative monetary circumstances, frontloading of commerce forward of upper tariffs, lower-than-expected tariffs, and looser fiscal insurance policies in main economies.
The IMF notes that regardless of lingering uncertainty over commerce insurance policies and ongoing geopolitical tensions, the worldwide financial system displayed appreciable resilience and maintained progress momentum within the first half of the yr.
Development outlook in key economies
Even with these stabilising elements, progress in main buying and selling companions for LAC is projected to gradual in 2025. Within the US, GDP progress is forecast to decelerate to 2 % in 2025 and stay regular at 2.1 % in 2026, down from 2.8 % in 2024. The slowdown is attributed to weaker shopper spending and slowing funding.
China is projected to develop 4.8 % in 2025, simply shy of 2024's 5 %, supported by exports to locations apart from the US and home demand, possible buoyed by coverage stimulus. Development is predicted to reasonable additional to 4.2 % in 2026.
The euro space is predicted to see a modest pickup to 1.2 % in 2025, from 0.9 % in 2024, earlier than stabilising at 1.1 % in 2026. The IMF factors to Eire's traditionally excessive pharmaceutical exports to the US and anticipated will increase in protection spending as contributing elements. Different superior economies are anticipated to decelerate, partly because of tariff-related disruptions.
World inflation is projected to ease amid cooling demand and falling power costs. For nations experiencing tariffs as a detrimental demand shock, inflationary pressures are anticipated to weaken additional.
What this implies for Latin America and the Caribbean
For LAC, the IMF notes that structural and exterior elements cushioned the preliminary influence of world coverage shifts. Comparatively low publicity to US commerce, decrease international tariffs than initially introduced, and the area's decrease personal tariffs offered a buffer. Sovereign spreads fell under end-2024 ranges, regional currencies rebounded, bond yields declined, and commodity costs stabilized.
Exports contributed strongly to progress, with stable copper and manufacturing exports from Chile and Mexico and agricultural output supporting exports in Argentina, Brazil, Colombia, and Uruguay.
Personal consumption remained sturdy in some nations however slowed in Brazil and Mexico, whereas company lending and funding continued to point out muted contributions. In Central America, Panama, and the Dominican Republic, remittances supported exercise, whereas Caribbean economies benefited from tourism, building, and better power manufacturing.
Inflation convergence towards targets continued, albeit slowly. Some nations, together with Peru and Paraguay, maintained stability round targets, whereas Brazil and Mexico noticed non permanent upticks. Imported inflation pressures eased as currencies strengthened following 2024 depreciations.
Coverage measures and structural reforms
The IMF emphasises the significance of fiscal consolidation, warning that public debt stays elevated or surpasses pandemic peaks in some nations. “Fiscal consolidation is essential for rebuilding buffers and would additionally assist inflation convergence to targets, together with via its influence on inflation and inflation expectations,” the report states.
Financial coverage throughout LAC has been data-driven and conscious of inflation developments. Central banks in Mexico, Chile, Colombia, Peru, Uruguay, Brazil, and Paraguay adjusted their coverage stances as wanted, balancing inflation management with assist for progress.
Structural reforms are highlighted as key to lifting potential progress. Persistent useful resource misallocation, weak firm-level productiveness, low commerce integration, and restricted infrastructure constrain the area. The IMF notes that “streamlining regulatory frameworks and reaching commerce agreements may assist increase integration, funding, and progress.” Stronger governance, decreased debt, and fewer risky inflation are essential to mitigating uncertainty and fostering long-term progress.
Backside line
The IMF paints an image of a world financial system that has been jolted by commerce coverage uncertainty beneath Trump, however not toppled. Markets tailored, and progress continued via H1 2025, aided by accommodative insurance policies and resilient home demand in key economies.
