The World Bank has urged Latin America and the Caribbean to ignite a new era of growth by betting on entrepreneurship, innovation, and private-sector dynamism — a pivot the institution says could help the region escape its decades-long cycle of low productivity and uneven prosperity.
In its latest regional outlook, the Bank projects GDP growth of 2.3% in 2025 and 2.5% in 2026, the slowest among global regions, as persistent inflation, rising public debt, and subdued investment weigh down recovery prospects. Yet, the institution insists that the right mix of reforms — targeting entrepreneurs and the environment in which they operate — could transform the region’s economic trajectory.
From Survival to Scale
The report underscores that most enterprises across the region remain micro or small businesses, comprising up to 70% of all firms in some economies. These businesses, while vital for livelihoods, often struggle to grow due to limited financing, regulatory friction, and skill shortages. The World Bank distinguishes between these and what it terms “transformational entrepreneurs” — a small subset capable of scaling, innovating, and driving national productivity.
“The entrepreneurs who dare to scale are the engines of real economic transformation,” said William Maloney, the Bank’s Chief Economist for the region. “But they cannot thrive in isolation. They need systems that reward innovation, not bureaucracy.”
Debt, Inflation, and the Drag of Delay
The report paints a sobering macroeconomic picture. Inflation remains stubborn, while public debt-to-GDP has risen from 59.9% in 2019 to 63.8% in 2024. Monetary easing in advanced economies has been slower than anticipated, pushing up borrowing costs for emerging markets and tightening liquidity for private investment.
Adding to this pressure is the projected 10% decline in commodity prices in 2025, followed by another 5% drop in 2026, curbing revenues in critical export-dependent sectors.
The Roadmap Forward
To counter this, the World Bank outlines a three-pillar strategy designed to foster a more fertile environment for private enterprise and job creation:
- Invest in People:
Prioritize education reform and managerial development. Align training with private-sector needs, modernize labor regulations, and build a pipeline of capable, risk-ready entrepreneurs. - Rebuild the Business Climate:
Simplify regulations, eliminate distortionary subsidies, and modernize taxation to attract investment. Strategic investment in logistics, energy, and digital infrastructure will be critical to lowering barriers to entry. - Unlock Access to Capital:
Streamline credit access by strengthening risk-sharing mechanisms, improving bankruptcy frameworks, and expanding private investment participation. Currently, one in four firms faces credit constraints — double the OECD average.
A Turning Point in the Making
Despite the headwinds, the World Bank emphasizes that Latin America and the Caribbean have shown remarkable resilience amid global turbulence — from the pandemic to commodity shocks. Now, the challenge is to translate that resilience into productive dynamism.
“Stability was the first step,” said Susana Cordeiro Guerra, Vice President for Latin America and the Caribbean at the World Bank. “What comes next is building the environment where entrepreneurs can turn that stability into sustained prosperity.”
If the region succeeds, the Bank argues, it won’t just recover — it will reinvent itself as a global hub for entrepreneurial innovation, productivity, and inclusive growth.
