Latin America in March 2025: Inflation, Political Tensions, and Strategic Opportunities for Global Investors

Latin America begins 2025 marked by rising inflation, political tensions, and stalled reforms. However, countries like Peru, Mexico, and Uruguay show signs of stability and growth, creating key opportunities for strategic investors. Learn more with BAI Capital.

Latin America closed the first quarter of 2025 with a mix of contradictory trends: while some countries are showing signs of economic recovery and improved investment indicators, others are grappling with inflationary pressures, political scandals, and governance crises.
For international investors, the landscape demands attention and strategy: identifying resilient markets, dynamic sectors, and predictable political contexts is key to tapping into the region’s potential.

Inflation Rebound: New Trend or Temporary Pause in Disinflation?

Throughout most of 2024, Latin America maintained a downward trend in inflation levels, thanks to restrictive monetary policies and improvements in supply chains. However, February and March 2025 marked a slight price rebound in almost all countries in the region.

This trend is not uniform but shows worrying signs:

• In Brazil, monthly inflation reached 1.31% in February, driven by a 16.8% increase in electricity rates, pushing the annual inflation rate to 5.06%.
  
• Argentina, with a year-over-year rate of 66.9%, saw monthly inflation rise from 2.2% to 2.4%, particularly affecting vulnerable sectors.
  
• In Chile, 12-month inflation reached 4.7%, exceeding the Central Bank’s target range and fueling expectations of tightening measures.
  
• Colombia, after 24 months of decline, recorded its first inflation increase, with an annual rate of 5.28%.
  
• Uruguay and Ecuador, while generally stable, also saw monthly CPI increases of 0.69% and 0.09%, respectively.
  

This rebound could be driven by seasonal factors, but also external shocks (such as rising fuel prices, global logistical tensions, or weather events), prompting central banks to tread carefully when considering rate adjustments.

Brazil: Political Weakness and Governance Challenges

President Lula da Silva’s administration is experiencing its lowest approval rating across all three terms, with only 24% public support according to Datafolha. Inflationary pressure, public discontent over basic food prices, and legislative deadlock create a difficult environment for policy implementation.

From an economic standpoint:

• GDP grew by just 0.2% in Q4 2024.
  
• A new program was launched to stimulate industrial investment, with R$ 3 billion (≈USD 528 million) allocated for 2025–2026.
  
• The energy sector faces pressure, especially ahead of COP30 in Belém, where infrastructure remains insufficient and environmental concerns are growing.
  

Argentina: Crypto Scandal and Erosion of Public Trust

The $Libra cryptocurrency scandal, promoted by President Javier Milei himself, caused estimated losses of USD 250 million for more than 10,000 investors. Price manipulation and mass sell-offs by its founders triggered national and international criticism.

Additionally:

• Unemployment in Buenos Aires rose from 4.6% to 7.5% in one year.
  
• Poverty continues to rise, with the basic food basket surpassing the minimum wage.
  
• The president’s approval rating dropped 10 percentage points in a single month, according to AtlasIntel.
  

Despite these challenges, Argentina remains attractive for cross-border shopping tourism, especially from Chile, which has seen a sharp increase in Argentine visitors.

Peru: The Region’s Most Robust Economy in 2025

With a 4% GDP growth projection, Peru stands out as Latin America’s most dynamic economy this year. Contributing factors include:

• A 29% increase in public investment (January–February).
  
• Strong momentum in mining and infrastructure sectors.
  
• Rising business confidence.
  
• A controlled fiscal deficit (2.2%) and moderate public debt (33%).
  

On the social front, Peru has improved financial inclusion and internet access, although disparities by age and education persist. Notably, 50.2% of newly registered businesses are led by women, particularly in services and retail.

Colombia: Blocked Reforms and Political Fragmentation

Colombia is facing a period of high political volatility. President Gustavo Petro has a 32% approval rating and a hostile Congress that has blocked his flagship reforms.

• The labor reform was rejected.
  
• The healthcare reform faces similar opposition.
  
• The government plans a national referendum, but would need over 13.6 million valid votes—a threshold never before reached in Colombia.
  

Economically, Colombia is forecast to grow 2.6% in 2025 (up from 1.7% in 2024), driven by agriculture and financial services, although foreign direct investment is down 27.5% so far this year.

Chile: Upcoming Elections and Political Scandals

Chile will hold presidential elections in November in a polarized climate following multiple high-profile resignations due to corruption. Former Interior Minister Carolina Tohá has announced her candidacy but trails behind right-wing figures like Evelyn Matthei.

Economic highlights:

• Monthly inflation reached 0.4% in February.
  
• Shopping tourism from Argentina has boosted local economies in border cities.
  
• Public debt is raising concerns, and fiscal tightening may be on the horizon.
  

A nationwide blackout on February 25 left 98.5% of the population without power, exposing weaknesses in the energy grid.

Mexico: Resilience Amid Trade Tensions

Despite tariff threats from the U.S. government, Mexico remains a solid economy:

• None of the 575 investment projects have been canceled.
  
• Foreign direct investment hit a record USD 36.872 billion in 2024.
  
• The peso remains stable, and a national agreement has frozen gasoline prices for six months.
  

However, a 27.5% drop in heavy vehicle production in February signals vulnerabilities due to trade dependence on the U.S.

Ecuador: Electoral Polarization and Fiscal Pressure

The runoff presidential election between Daniel Noboa and Luisa González, with just a 0.17% vote difference in the first round, is under intense scrutiny. The outcome will impact the IMF relationship, which postponed a USD 410 million disbursement until after the election.

Other key points:

• Annual inflation is just 0.25%, among the lowest in the region.
  
• The government reaffirmed dollarization, rejecting parallel currencies.
  
• Heavy rains have affected over 100,000 people and caused serious infrastructure damage.
  

Uruguay: New Administration with a Progressive Vision

President Yamandú Orsi, supported by former President Mujica, took office with a moderate progressive agenda. While his coalition controls the Senate, it lacks a majority in the Lower House.

Key economic indicators:

• The economy grew 4.1% in 2024.
  
• Inflation remains within target (5.1% annual).
  
• The fiscal deficit stands at 4.4% of GDP, limiting spending flexibility.
  

Social challenges include child poverty (18.6%) and poor academic performance, as shown in recent PISA scores.

Europe and Latin America: A Strategic Relationship in Transition

The European Union is working to deepen ties with Latin America through:

• Joint security efforts against organized crime (CLASI agreement).
  
• A new agricultural policy roadmap with direct implications for Latin American exports.
  
• A push for fair trade agreements ahead of the CELAC-EU Summit in Colombia in November 2025.
  

These changes may benefit countries with higher production standards, but pose competitiveness challenges for exporters like Brazil, often criticized for lower environmental standards.

In conclusion, the region faces a paradox: notable economic progress in some countries, alongside political instability, social unrest, and structural challenges. For global investors, the key lies in discerning transformational markets from those in decline, and aligning with ventures that offer strong fundamentals, reliable returns, and institutional support.

At BAI Capital, We’re Ready to Help You Invest Securely in the U.S.

From our headquarters in Miami, we support Latin American investors seeking financial and immigration security through the EB-5 Visa Program, as well as attractive opportunities in U.S. real estate and private equity.

Our projects are located in strategic U.S. markets, offering audited, legally backed, and transparent investments with competitive returns.

Would you like a personalized investment analysis based on your country and risk profile? Contact us today.