WASHINGTON, Oct. 7, 2025¡ªLatin America and the Caribbean can break its low-growth cycle by harnessing entrepreneurship to create jobs, boost productivity, and accelerate innovation, says the World Bank Group¡¯s new , Transformational Entrepreneurship for Jobs and Growth.
Constrained by stubborn inflation, rising debt, weak investment, and ongoing global uncertainty, the report forecasts the region to grow by 2.3 percent in 2025 and 2.5 percent in 2026, the slowest among global regions.
¡°Governments in the region have steered their economies through repeated shocks while preserving stability. Now is the time to continue building on that foundation¡ªaccelerating reforms to improve the business climate, invest in enabling infrastructure, and mobilize private capital,¡± said Susana Cordeiro Guerra, Vice President for Latin America and the Caribbean at the World Bank.
Regional outlook
The external environment remains challenging, with falling global demand and commodity prices projected to drop around 10 percent in 2025 and another 5 percent in 2026, hurting key sectors. Trade policy uncertainty also threatens market access and nearshoring.
Domestically, inflation persists, and public debt is high, with the debt-to-GDP ratio rising to 63.8 percent in 2024 from 59.9 percent in 2019. Slower monetary easing in advanced economies is keeping debt servicing costs high and credit expensive, further dampening investment, job creation, and productivity growth.
Transformational entrepreneurship
Against this backdrop, the report calls for domestic reforms to attract investment and promote ¡°transformational¡± entrepreneurship: high-growth firms that diffuse technology, create jobs, and raise productivity.
¡°The entrepreneur is the critical actor in development, identifying opportunities, innovating, and taking the risks needed to create value added and jobs,¡± said William Maloney, Chief Economist for Latin America and the Caribbean at the World Bank. ¡°Creating more dynamic economies in Latin America and the Caribbean will require strengthening our pipeline of entrepreneurial talent, while undertaking the systemic reforms necessary for them to thrive.¡±
Although support for entrepreneurship is strong, most firms in the region are micro or small businesses with limited paths to scale¡ªaccounting for up to 70 percent of enterprises in some countries. A smaller group of ¡°transformational¡± firms could drive productivity and innovation, but face familiar obstacles: scarce financing, heavy regulation, skills gaps, and weak infrastructure.
To stimulate private sector-led growth and jobs, the report proposes a three-point agenda:
- Invest in Human Capital, which is critical to job creation: Strengthen education quality at all levels and expand managerial support to grow the pipeline of capable entrepreneurs. Scale up short-cycle trainings, align workforce programs with private sector needs, and update labor regulations to protect workers and support business growth.
- Support policy and regulatory reforms that establish a business-friendly environment: Eliminate distortionary subsidies, reform taxes to boost investment, and invest in logistics, energy, and digital infrastructure to lower entry barriers.
- Expand Access to Finance ¨C including private investment: Over a quarter of firms face credit constraints¡ªabout twice the OECD rate. Strengthen risk-sharing, streamline dispute resolution, and modernize bankruptcy laws to improve capital allocation and protect creditors and entrepreneurs.
With the right reforms, Latin America and the Caribbean can foster entrepreneurship to fuel innovation, expand opportunities, and build more dynamic, competitive economies.
Access the report .
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