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Latin America’s economic problems are structural, and they are not going away on their own.

A recent survey by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) makes this clear, showing that neither the market-oriented reforms of the 1980s nor the progressive agendas of the left-leaning governments that have led much of the region in recent decades have delivered sustained growth.

The conclusion is unavoidable: Latin American countries must adopt a new development model.

The data support this conclusion. Since 1990, annual growth has averaged just 2.5% – less than half the 5.5% average recorded between 1950 and 1980, an era defined by state-led industrialization.

The slowdown has affected nearly every country in the region, including its two largest economies, Brazil and Mexico. It has been especially severe in Venezuela, where economic output has fallen to less than 60% of its 1990 level.

Periods of rapid growth have been rare. The most notable episode, between 2004 and 2008, was driven largely by soaring commodity prices rather than domestic reforms.

By contrast, crises have been frequent and severe, including the fallout from the 1997 Asian financial crisis and what I have called Latin America’s “new lost decade” between 2014 and 2024, when annual growth fell to just 0.9% – even lower than the 1.4% recorded in the 1980s, the region’s original lost decade.

The slowest-growing region in the developing world

The subsequent recovery has also been weak. The region grew by 2.2% in 2024, with ECLAC projecting a similar pace for 2025 and 2026.

The International Monetary Fund echoes this outlook, predicting 2.2% growth in 2025 and 2.4% next year.

Despite the slight uptick, Latin America is widely expected to remain the slowest-growing region in the developing world, trailing the Middle East, emerging and developing Asian economies, and Sub-Saharan Africa.

Weak economic performance has had profound social consequences. After declining between 2002 and 2014, poverty has held steady at just under 30%, while extreme poverty remains close to 10%.

Fiscal fragility compounds the problem: high public debt, combined with elevated global interest rates, has forced governments to allocate a significant portion of their resources to debt-service payments, leaving limited room for social spending or public investment.