Central and Latin America: Country Risk Ratings

Argentina (ARG)

Argentina’s overall risk remains medium high, with President Javier Milei’s administration having been boosted by October election results that saw his party (La Libertad Avanza LLA) doing better than expected in mid-term elections.  USD2bln of U.S. Treasury FX purchases and a USD20bln credit line from Milei’s friend, U.S. President Trump, helped to reduce financial market volatility and boost Milei support. The continued slowing in inflation and fear of returning to economic instability also helped support for Milei and LLA. Milei wants to cut government expenditure/GDP by a further 6% and undertake large scale tax cuts through until 2031, alongside further reforms including to the labor market.  However, Milei’s LLA party does not have a majority in congress, which require moderate party support for legislation and this will likely slow the reform process in coming years. Thus, political interference and legal & regulatory risk levels remain medium high.

Economically, Argentina’s GDP growth is projected to rebound from the 2023-24 recession with a positive growth of 4.5% in 2025 and the IMF project a still strong 4.3% in 2026. Growth also sits in a positive position due to the continued reassurance of Argentina’s move towards macroeconomic stability and reform, a well performing agricultural sector and investment into the energy sector. Additionally, Argentina continues to benefit from the 4 year IMF USD20bn Extended Fund Facility in April 2025.  This leaves the inability of the government to provide stimulus at a medium risk rating. However, Argentina lies as the IMF’s largest debtor and still has an overall government debt of 78.81% of GDP in 2025. Therefore, sovereign non-payment risk stays at medium. Inflation has also been on a downward trend since 2024 and is forecast to be 41.3% by the IMF in 2025 and 16.4% in 2026. Since the deal with the IMF, year-long capital controls were also removed, easing access to official currency markets. However, exchange transfer risk remains medium high due to the country’s previous economic performance. Finally, the risk of doing business continues at a high level.

Bolivia (BOL)

Overall risk in the central South American country of Bolivia remains high. Following the Presidential election in October, Rodrigo Paz, a senator from the Christian Democratic Party, had claimed victory with a 54.5% of the overall vote, defeating his conservative rival Jorge Quiroga and ending approximately two decades of left-wing governance. President Paz assumed office November 8th 2025, while pledging that he will continue to support social programmes but also promote private sector led growth. Political interference and legal & regulatory risk are both assessed as very high. The election of Paz has raised hope for more international investment into Bolivia’s lithium reserves, after years of unfulfilled promises and limited development of the world’s largest ultralight metal resources due to state control and political opposition. Previous fast-tracking of foreign investment to exploit lithium reserves had taken place by Bolivia’s energy minister in July, with contracts that could possibly bring USD2 bln through Chinese and Russian companies. However, recently elected President Paz has commenced a review of the opaque contracts with both Chinese and Russian firms. Political violence continues to be considered as medium high risk. In July, the lithium contract agreements, mentioned above, had raised tensions between the past government and citizens, as deals are expected to cause great environmental damage and would not be supported by local communities.

In terms of the Bolivian economy, GDP growth has continued to decelerate throughout 2025, with an IMF forecast of 0.6%. Volatile growth is becoming more apparent, with reliance still being centred around imports of fuels and capital goods. Although, Bolivia has a significant amount of mineral reserves (in particular lithium, silver and zinc) as well as agricultural resources, the economy shows limited progress regarding diversification. Meanwhile, inflation accelerated to levels not seen since the 1980’s, with a forecast of 20.8% in 2025, driven by declining natural exports, prohibiting foreign income, sharp falls in the currency and rising food prices. This has led to the new government pledging free market reforms and to re-establish relations with the U.S., but progress needs to be made in controlling inflation. Therefore, the inability of the government to provide stimulus stands at a high-risk rating, while the risk of doing business remains high. The newly elected government inherits a government debt to GDP of 93.7% in 2025, according to the IMF. The unsustainable debt burden is another major issue for President Paz, though he stated that Bolivia would not turn to an IMF rescue package and would follow a more gradual economic adjustment. Sovereign non-payment risk continues to be considered high. Additionally, exchange transfer risk sits at medium high, with FX reserves of USD near zero and the BOB (Bolivian boliviano) has lost half of its value on the black market in 2025.

Brazil (BRA)

Overall risk in Brazil remains medium. U.S. President’s 50% tariffs on Brazilian imports have caught the headlines, but the economic impact is diminished by the closed nature of Brazil’s economy; 50% of goods being exempt and only 12% of goods exports going to the U.S.  Though the U.S. Senate voted against the tariffs, rejection in the House of representatives is unlikely.  Brazil can also divert the most impacted exports to other markets. Amidst the new U.S. policy, Brazil is looking to build closer ties with other countries across the world. Meanwhile, with Trump’s tariffs being designed to punish Lula for Brazil’s successful prosecution of ex-president Bolsonaro, public support for Brazil’s president Lula has increased meaning he is now slightly ahead in opinion polls for the October 2026 election. However, the race still remains close and Tarcísio de Freitas (an ex-Bolsonaro minister) is seen as the most likely run off candidate in the 2nd round. The critical long-term issue is the budget deficit and government debt trajectory, with the latter forecast at 91.4% of GDP in 2025 according to the IMF. Sovereign non-payment risk is medium high. This comes as now more than 62% of debt is sensitive to short term rate changes. Debt servicing costs are now 7% of GDP, while the government has pledged a primary surplus from 2026. If fiscal consolidation is not seen post-election, then it could cause a domestic financial crisis. The long-term fiscal problems mean that the risk of doing business remains high. For now, the economy has been reasonable in 2025 helped by global demand for agriculture and the economic momentum from the past couple of years. However, recent economic data shows the economy slowing, as super high policy rates at 15% start to hurt. Economic growth is projected by the IMF to slow from 2.4% in 2025 to 1.9% in 2026.  The IMF also forecast 5.2% inflation in 2025 as growth remains above trend and the labor market is tight. Additionally, the Brazilian central bank is not expected to cut interest rates until 2026. Banking sector vulnerability is medium, with high interest rates likely to boost non-performing loans.  

Chile (CHL)

Chile’s overall risk is assessed as medium low; alongside all other sub-indices we cover remain assessed as medium low. The recent Presidential election has seen Jeannette Jara, part of the communist party, win the first round followed by far-right opposition leader Jose Antonio Kast. Voters will have to coalesce around one of the two presidential candidates in the run off till December 14th. Kast, however, is expected to clinch the victory going into next month, as voters continue to prioritize issues related to crime and immigration over progressive reforms. Kast has proposed that he will remove all undocumented migrants and use his military power in high crime neighbourhoods around Chile. Previous president Gabriel Boric’s administration lagged in the recent election due to complication of reforms in taxation, pensions and the countries lithium supply. Political interference, political violence and legal & regulatory risk all remained medium low.

In terms of Chile’s economy, the IMF forecast GDP growth at 2.5% in 2025 and estimates stabilization in years to come, with an expected growth rate of 2% in 2026. Chile is the world’s largest copper miner and also an important supplier of lithium, with China remaining as the South American country’s dominant trading partner. The last major remaining condition was also recently fulfilled in the joint venture between Chile’s state-owned mining company, Codelco, and SQM, in which a Chinese company holds a significant stake. China’s market regulator had approved the joint venture in early November, requiring Codelco and SQM to provide China a minimum supply at prices that do not go a percentage above the benchmark market price. The deal is to be completed by the end of 2025. Inflation is expected by the IMF to hit 4.3% in 2025, as electricity tariffs had inflated consumer prices earlier this year. The central bank had eased its policy rate to 4.75% in July 2025 from 5%, as they expect inflation to return back to their target by the first half of 2026. The risk of doing business remains medium low. Government Debt to GDP is currently forecast at 42.7% in 2025, while 43.7% is expected in 2026. Chile’s government debt is considered low compared to other emerging economies, however, challenges remain in the management of the country’s fiscal deficit with higher financing conditions and ongoing spending pressures. Sovereign non-payment and exchange transfer are both assessed as medium low risk.

Colombia (COL)

Overall risk in Colombia remains medium. Gustavo Petro continues to be the President of Colombia since his election victory in 2022, while an election is scheduled for the first half of 2026. Petro’s relationship with the U.S. has declined in recent times, with the Colombian President having his visa revoked due to his participation in a pro-Palestinian demonstration in the City of New York. In addition, Trump’s administration had made the decision to decertify Colombia, although plans to continue assisting the South American state with millions of funding every year. Decertification was decided following the beliefs that Colombia had failed to fight its ongoing drug trafficking. 1997 was the last time Colombia were decertified. Political interference and legal & regulatory risk both remain medium high. In terms of political violence, this indicator stays medium. Colombian Senator, Miguel Uribe, a lawmaker for the right-wing opposition had been shot in early June during a campaign in Bogota. Miguel Uribe’s death was announced 2 months after the shooting in August, meaning this attack has been considered a significant breach of political order. The teenager that committed the act of political violence was sentenced to seven years in juvenile detention, while police believe former left-wing Farc Rebels were involved in Uribe’s death. Dissident factions of Former Farc guerrilla groups were also reported to be involved in relation with 18 deaths and 40 injuries in Bogota, following a cargo vehicle armed with explosives was detonated close to a Colombian Aerospace Force Base resulting, in a further 6 deaths and 71 injuries.

In terms of the economy, Colombia is currently forecasted to have a GDP growth rate of 2.5% in 2025, the IMF further estimate a shift to 2.3% in 2026. Growth will be supported by rising private investment and strong domestic consumption even though inflation is above Colombia’s target rate, meaning interest rates are not being cut (9.25% since April 30). The IMF project an inflation rate of 4.9% for 2025, down from highs of 11.7% in 2023. Inflation is to continue to reduce with the IMF projecting 3.5% in 2026. Colombia’s government are attempting to provide more macroeconomic stability and finance for 2026 through a tax reform bill presented in early September. The reform bill in question aims to raise value-added tax on petroleum derivatives and a 1% tax on the export of crude oil and coal, or on its first sale. The plan estimates an added 28.2 trillion pesos in 2027. The risk of doing business remains medium high. According to the IMF, Government Debt is expected to be 58.9% in 2025 and is predicted to slightly increase to 61.9% in 2026. The rise of debt is due to a growing fiscal deficit, while record Eurobond sales were recorded in September 2025 to manage the Colombian Government debt. Sovereign non-payment risk is now considered medium high, while exchange transfer risk also remains at medium low.

Cuba (CUB)

Overall risk in the Caribbean Island of Cuba remains high. President Miguel Díaz-Canel, who has been recognised as the 17th President of the Cuba since 2019, is the 8th First Secretary of the Communist Party (PCC) following his re-election in the 2023 election. President Díaz-Canel had recently rebuked Labor and Security Minister Marta Elena Feito for comments regarding ‘beggars’ in Cuba, which showed a major lack of empathy towards poverty and inequality issues within Cuba. Political inference and legal & regulatory risk continue to be assessed as very high and high. Relation between the U.S and Cuba remain tense. In Q3, the UN have called for an end to the U.S. economic embargo on Cuba, requiring exports to Cuba or imports from Cuba to be licensed or otherwise prohibited. President Trump’s Administration, however, continue to stay firm with their vote against the removal of the embargo, and further lobbied by sharing an accusation of approximately 5,000 Cubans fighting alongside the Russian military in the Russia-Ukraine conflict. Votes positively for Cuba were 165 in favor of a resolution, while there were 12 abstentions and 7 against. In contrast, strong relations with China and Russia have been maintained. In particular, President XI Jinping and China has confirmed their willingness to provide support to the Caribbean Island, attempting to enhance bilateral exchanges, improve cooperation and build relations between China and Cuba for the future. Additionally, Russia continues to stand by their more than USD 1 bln investment through Russian companies by 2030. Investment is planned to be focused on Cuba’s agriculture industry and electricity production, developing an economic and geopolitical relationship between Moscow and Havana.

In terms of Cuba’s economy, GDP growth’s trend is not expected to see any improvement throughout 2025, with the Economy Minister Joaquin Alonso noting that growth fell 1.1% last year on top of a 10% decline since 2019. Additionally, he stated, agriculture, livestock farming and mining have contracted by 53.4% over the past five years, alongside a 23% decline in manufacturing. September had seen the restoration of Cuba’s nationwide blackouts which had essential services and infrastructure at stand still.  Infrastructure has also suffered from the environmental challenges of the recent Hurricane Melissa. Hurricane Melissa was categorised as category 3 hurricane as it passed over Cuba. Therefore, the risk of doing business remains very high, as supply chain disruption also remains but at high risk. In terms of government debt, levels have continued to show an unsustainable public debt. This is despite efforts to restructure its debt commitments.  For instance, a debt rescheduling agreement with the Paris Club at the start of 2025, but also a debt conversion programme alongside Spain in July 2025, which aims to transform a portion of Cuba’s debt into a fund that will allow development. However, the outlook for 2026 does not suggest much improvement. Sovereign non-payment risk and inability of government to provide stimulus are both assessed as medium-high. Finally exchange transfer risk remains high, due to the Cuban Peso’s ongoing foreign currency shortage and informal currency market hitting a record low of CUP 400 to the USD.

Dominican Republic (DOM)

Overall risk in the Caribbean Nation, Dominican Republic, remains medium. President Luis Abinader has been in office for just over four years, re-elected in May 2024 for a second term as president. Abinader is most memorably known for his leadership during the Covid-19 pandemic but also his initiatives regarding anti-corruption and economic development. Currently, the President’s administration is focusing on new fiscal reforms, combatting tax evasion which impacts 47% of VAT and 63% of income tax. Plans will aim to boost state revenue but also quality of life within the Dominican Republic. Political interference is still assessed as medium, while legal & regulatory risk remains medium-high. In addition, the Dominican Republic continue to hold their strong stance on the conflict in Haiti especially regarding the shared border, as gang violence has yet to see any major reduction since the president’s assassination in 2021. The west border has had new security measures implemented to control the rising instability, including strict deportation policies regarding Haiti migrants. Although, political violence remains medium due to precautions.

Economically, the IMF forecast a slight deceleration in GDP growth in 2025 to 3%, estimating that growth will reach highs of 4.5% in 2026. Overall, the reduction of inputs from the U.S. economy have affected GDP levels in 2025, however, the projected rise in 2026 is due to the ongoing investment into the tourism industry and the state’s infrastructure. In the northwest of Santo Domingo, the gold and silver mine, Pueblo Viejo, is also one of the largest gold-producing mines in Latin America and represents the Dominican Republic’s second-largest export at 11.5%. President Abinader has shown further interest regarding the expansion of the mining industry. In the light of this, the president has created a state company named, Minera Dominicana, to expose rare earths through improved mining strategies. Although Trump imposed a 10% baseline tariff on the country half-way through 2025, the Dominican Republic’s diverse export portfolio and its free-zone manufacturing sector has mitigated the damaging effects that have reduced growth for many other economies. Therefore, the risk of doing business remains medium. Inflation, according to the IMF, is forecast at 3.7% in 2025 with an estimated rise to 4% in 2026. The Central Bank of the Dominican Republic (BCRD) have continued to hold their policy rate of 5.75% due to the U.S. tariff agreements, global uncertainty and the conditions of international financing. Government debt is forecast to reach 60% of GDP in 2025. The issuance of more local peso dominated bonds through out international markets, along with an increase in domestic bonds had seen a reduction in government debt to 67% in 2024 from 75% in 2019. Therefore, sovereign non-payments risk and exchange transfer risk both remained, medium and medium-low, respectively. Finally, Hurricane Melissa had struck towards the end of October 2025. Catastrophic flash flooding and landslides have hit major countries like Haiti and Dominican Republic. For now, supply chain disruption remains medium-low risk.

Ecuador (ECU)

Ecuador, located on South America’s West Coast, continues to have an overall risk of medium high. Critical risk continues regarding gang violence, while President Daniel Noboa begins his crackdown in Ecuador, a country known to have the highest homicide rate in Latin America. The country’s homicide rate increased by 40% between January and July 2025 compared to the same period last year. President Noboa had recently proposed a measure that would enable the return of foreign military bases into Ecuador, allowing greater foreign cooperation in the fight against organised crime. Unfortunately for the President, a majority of the ballots in the referendum showed rejection to the proposal, with many voters believing it could bring sovereignty concerns, while others are still unhappy with Noboa’s recent decision to remove the diesel subsidy. The fiscal reform was aimed at reducing the country’s fossil fuel dependency and freeing funds for social programs; however, protests had escalated over the decision, as the price per gallon on automotive diesel had risen by 56%. Political violence and political interference both remain medium high, while legal & regulatory risk is considered as high.

Economically, Ecuador’s GDP growth has rebounded from its decline in 2024, with the IMF forecasting 3.2% growth in 2025 and 2% in 2026. Although the country continues to prioritize its security crisis alongside climate related issues, a recovery is expected through political stability, strong natural resource and agricultural exports. Non-oil exports, such as cocoa, have remained strong as Ecuador is set to become the world’s second-largest cocoa grower. Although prices have fallen by around a third this year, they remain at historically elevated levels. Additionally, petroleum exports are strong alongside the development of Loma Larga, a gold project where the government have revoked the environmental license put upon the Canadian mining company DPM Metals. The inability of the government to provide stimulus remains medium risk. Government debt is forecast to be approximately 49% of GDP in 2025, a reduction from the previous year’s 53.8%, as the IMF believes Ecuador is performing well in relation to the possible USD5 bln loan program expansion. Sovereign non-payment risk is assessed as medium. Prices are expected to remain stable, with an IMF forecast of a 1.1% inflation rate in 2025. Meanwhile dollarization continues to limit monetary policy, and ongoing liquidity issues result in the unchanged medium risk for exchange transfer and the high risk of doing business.

Haiti (HTI)

Overall risk in Haiti continues to be considered as high, as political insecurity and gang violence remains a major challenge. The largest population in the Caribbean has not held an election since 2016, as the last president delayed elections until his assassination in 2021. Elections have now been further stalled until the end of the current interim government’s mandate on the 7th February 2026, as the actions taken by armed gangs has worsened throughout 2025. Early September had witnessed an armed attack on a fishing village north of Haiti’s capital, leading to approximately 40 deaths. The U.N. Sectary-General condemned the attack, urging Haitian authorities to smother the ongoing gang violence and bring justice to citizens. Political violence has therefore remained high. Political interference and legal & regulatory risk both are assessed as very high risk. In terms of relation and support, Canada had announced its funding to support stability and the ongoing threat of organized crime throughout the region, CAD 60 mln (USD 43.35 mln) is the official figure of funding for Haiti. On the other hand, the U.S.’s funding for the U.N. backed security force established in Haiti is a doubt, as only 1,000 troops were deployed compared to the expectation of 2,500 due to a lack of funds. The U.N. had rejected Washington’s plan to restructure the leadership of the security force, while the U.N. is aiming to deploy another 4,500 troops to tackle escalating gang violence.

Economically, the IMF forecast GDP growth at a -3.1% decline in 2025, expecting a slight recovery to a -1.2% decline in 2026. Growth is forecast to contract due to the ongoing political unrest, while gang violence continues to shrink the potential of private investment.  Meanwhile, a high and volatile 27.8% inflation rate restricts private consumption. Additionally, though agriculture employs a significant proportion of Haiti’s population, it remains fragile following other industries and services. The risk of doing business has therefore remained very high. Government debt to GDP, however, has shown a far better trend since receiving debt cancelation from a collection of international creditors, including the IMF and World bank. Sovereign non-payment risk is assessed as medium high, supported by an IMF forecast of 11.8% of GDP in 2025 and 10% in 2026. Finally supply chain disruption remains high, following the devastation caused by Hurricane Melissa. The storm did not directly hit the most populous country in the Caribbean, though authorities reported approximately 25 deaths due to the harsh living conditions.

Honduras (HND)

Overall risk in the Central American state, Honduras, remains medium high. The general election in Honduras is upcoming, scheduled for the 30th November 2025. At present time Xiomara Castro holds the presidential role, following her 2021 election victory, which ended 12 years of rule by the Conservative National Party. In relation to the U.S., Honduras had sealed a deportation deal with the U.S..  Honduras have agreed to receive hundreds of deported individuals and families from Spanish-speaking nations, a deal that will last over the next two years. Ties with China have also developed over the past months with a free trade pact being discussed. Legal & regulatory risk remains high. Drug and gang related crime have been a major issue for Honduran authorities and even for the U.S., in relation to drug trafficking. The Honduran President has used an ‘iron fist’ policy to try and distinguish drug and gang related crime throughout neighbourhoods, police seizing hundreds of fire arms and detaining alleged gang members. However, residents continue to be unconvinced with the President’s crack down on crime. Indicating why political violence and political interference have both remained medium high.

In terms of the economy, GDP growth is projected at 3.8% in 2025, according to the IMF, and a rate of 3.5% in 2026. Global uncertainty and political issues are a major issue for Honduras’ economic development. However, agriculture has seen improvements providing a majority of the country’s export earnings. Alongside public and foreign investment, this has helped GDP growth. In addition, a staff level agreement has been reached with the IMF regarding a fourth review of its credit programme, lining up a disbursement of $120 mln later on in the year. The risk of doing business has for now remained high. Inflation is at a rate of 4.6% in 2025 for Honduras, and is estimated by the IMF to fall to 4.2% in 2026. The states debt carrying capacity remains strong since the reprofiling of debt. According to the IMF, government debt sits at 45.1% of GDP in 2025 and is projected to reach 44.1% in 2026. Sovereign non-payment risk and exchange transfer risk both remain medium. Finally, alongside the country’s climate issues, face masks had been reinstated to combat a variant of the COVID-19 virus, which has continued to cause an increase in respiratory illnesses and even in some cases death. Supply chain disruption continues to stay medium high.

Mexico (MEX)

Mexico’s overall risk is medium-high. The trade tensions with the U.S. are unresolved, but are not escalating. This is largely due to the good relationship that Mexico’s president Sheinbaum has with Trump. Mexico is trying to make further progress on dealing with illegal immigration into the U.S. and the fentanyl trade. However, Trump wants to renegotiate the USMCA in 2026, where he will likely take a tough stance on China exports via Mexico. With growth remaining very sluggish due to existing tariffs and uncertainty, a renewed trade war would delay the projected 2026 economic recovery. Though the Mexican central bank continues to cut interest rates consistently (with inflation projected to reach the 3% target in Q3 2026), this is only a partial offset to the negative trade effects. On balance, Sheinbaum will likely concede the trade battle to win the wider war of keeping most Mexican exports going to the U.S. In the end, we see a trade deal in mid-2026, with the key deadline in July 2026. Meanwhile, Sheinbaum still registers a staggering 70% approval rate while trade negotiations have allowed other issues to be eclipsed politically. However, concerns over the wide-ranging judicial elections and reforms have not diminished, though the impact will not be clear until 2027. Political violence risk in Mexico is still high due to the high level of violence in zones controlled by the narcos, which can exert great influence on local politics. Mexico’s crackdown on immigration and fentanyl has also increased tensions between the government and the drug gangs. Some within the Trump administration want the U.S. military to attack the Mexican narcos in Mexico, though the Mexican government opposes such ideas on sovereignty grounds. Legal and regulatory risk is also high, as the left-wing coalition led by MORENA controls both houses. This gives them a free hand to implement changes to the Mexican constitution, which could lead to regulatory changes in an anti-market manner and favouring state presence in the economy. Sovereign non-payment risk is medium, as the 59% debt level is controlled, and the government is currently undergoing a fiscal consolidation process to stabilize the debt/GDP ratio. The inability of the government to provide stimulus remains at medium reflecting the fiscal consolidation. Exchange transfer risk is medium, as the country holds an adequate level of foreign reserves capable of fulfilling its obligations in foreign currencies.

Panama (PAN)

Panama’s overall risk continues to be considered as medium. President José Raúl Mulino remains in office for the Central American State, although President Mulino will have to continue to withstand opposing political parties alongside his ever-changing public image. Political violence remains medium. Regarding the President’s public image, citizens of the Bocas del Toro region, its main banana producing region, had partaken in anti-government protests over plans to reform Panama’s social security system. Reforms meant that worker’s payments into pension funds would increase but benefits would not, leaving an increase of retirement age open. In late June, a state of emergency was declared on the province, 1 death was recorded while many protesters and police officers injured. Initial agreements were made with the union representing the banana workers; however, a final resolution has remained elusive. Political interference and legal & regulatory risk have been assessed as medium and medium-high. The Panama Canal is the world’s second busiest interoceanic waterway, connecting the Pacific and Atlantic oceans. Trump’s administration of tariffs and trade policy has increased shipments moving through the canal, while expectations also foresee an increase of liquefied petroleum gas being transported through this particular route. Additionally, the government is seeking investment into a possible LPG pipeline in the canal zone that will accommodate for 2 mln barrels per day. 2030 is the expected timeline of this becoming a reality.  According to the IMF, GDP growth has rebounded and currently is forecast at 4% in 2025, while estimates show stabilization at 4% in 2026. Since the closing of the Cobre Panama copper mine in 2023, more focus has been centralised into non-mining industries.  Growth has been shifting positively, alongside a spending reduction plan which could make the government’s 2025 fiscal target a reality. The Panama Canal is said to be in a strong financial position, raising revenues by 14.45% in 2025 to USD 5.7 bln. Furthermore, though negative inflation is currently apparent in Panama’s economy at -0.1% in 2025, the IMF’s expectations show an inflation rate of 2% in 2026. The banking sector’s vulnerability has improved to medium, while the risk of doing business remains medium. Government debt to GDP is currently sitting at 59.6% for this year as sovereign non-payment risk improves back to a medium risk. Government debt is projected to stabilise in the coming years, as the government will be able to finance the country’s budget deficit through its capital markets alongside the dollarization of the Central American economy. Finally, poverty reduction and prevention has slowed with remaining high inequality between urban and rural areas, while the quality of employment and human capital is restricting the possible progress in reducing Panama’s inequality. Supply chain disruption continues to be assessed as medium.

Paraguay (PRY)

Overall risk in the landlocked country of Paraguay remains medium. Santiago Peña of the conservative Partido Colorado has continued as President of Paraguay since his election in 2023, winning a 42.7% vote. Since President Peña’s election, he has promised to reduce crime and corruption throughout the political system. However, little to no progress has been made with structural barriers and a weak institutional frame work remaining apparent. Regarding former President Horacio Cartes, he continues to hold significant influence in Paraguay’s political system following his term from 2013 to 2018, due to his role as head of the Partido Colorado and his ongoing contact with the current President, Peña. Cartes who was sanctioned by the U.S for alleged corruption, has seen sanctions lifted two years after these allegations. Political interference remains medium high, while legal & regulatory risk also remains but at a level of high. In addition, the ongoing lack of transparency and corruption has led to protests, particularly by a group named Generación Z Paraguay. Generación Z Paraguay in late September protested against the initiative to reform the Constitution and make Horacio Cartes eligible once again. Authorities arrested 31 in connection to the protest after a violent turn of events, despite starting peacefully. Political violence has held its rating at medium.

In terms of the economy, the IMF forecast GDP growth at 4.4% in 2025 and 3.7% in 2026. Agriculture, especially beef and soybean exports, and the production of hydroelectric power are crucial drivers of national development. In particular, beef exports have recorded a strong performance towards the end of Q3 (January – September) with a 10.5% increase from levels in the same time period in 2024. In terms of energy, Paraguay recently unveiled a proposal to construct a bi-oceanic pipeline that would allow the flow of natural gas, as Paraguay aims to become a coordination point for Brazil and Argentina’s expansion of gas production. The risk of doing business remains medium high, primarily due to the ongoing low productivity in agriculture, stemming from infrastructure deficiencies and the severe impacts of climate change. The IMF forecast an inflation rate of 3.9% in 2025 and estimate 3.7% in 2026. Sovereign non-payment risk has held at a medium rating, as government debt is forecast by the IMF to reach 41.7% of GDP in 2025 and estimated to reduce to 40.6% in 2026, supported by improved revenue performance and a positive shift in economic activity. Poor infrastructure and a deficient healthcare system continue to hinder development throughout Paraguay, and therefore supply chain disruption remains medium high.

Uruguay (URY)

Overall risk continues to be assessed as medium-low in Uruguay. Yamandú Orsi had landed in office on the 1st March 2025, following his presidential victory in November 2024, when he and his Frente Amplio coalition (FA - left) had secured 49.8% of the overall votes. In September 2025, President Orsi demonstrated his global and domestic commitment during his UN speech, reinforcing that Uruguay is contributing to maintaining international peace and security, global health, food security, and continuing efforts to address climate change. President Orsi has pledged to maintain Uruguay’s stable economic status through gradual fiscal consolidation using the reduction of tax exemptions instead of raising tax, while also addressing ongoing crime, poverty and homelessness. Political interference and legal & regulatory risk continue to remain medium-low. September had also seen the signature of a Free Trade Agreement, between Mercosur (including Uruguay) and EFTA in Europe. The FTA enables a complete or part reduction of tariffs on goods exported from Uruguay, while businesses will be able to operate with greater certainty since business opportunities will become less scarce.

According to the IMF, GDP Growth currently is forecast at 2.5% in 2025, following a similar estimate of 2.4% in 2026. Uruguay’s stable political environment and forward-looking economic policies have made the economy one of the most attractive for investment in South America. Traditionally most reliance is held upon its agricultural sector with a projected positive harvest of soybeans, corn and rice for 2025. Diversification has taken place with the establishment of renewable energy, logistics and tech services. However, the trade agreement that was established in December 2024 has seen European Parliament lawmakers vote against the deal that liberalises trade between Mercosur nations and the EU. Opposition of the agreement fear that the trading group Mercosur will not align with European environmental standards, fuelling deforestation and harming the primary sector in Europe. The risk of doing business remains medium high. Inflation in late 2024, which prompted the central bank’s return to a hawkish stance, has since stabilised to a rate of 4.7% in 2025, while the IMF anticipate inflation to fall slightly to 4.5% in 2026. Reduction in inflation has therefore influenced the Central Bank’s decision to reduce its policy rate by 50bps to 8.25% in October 2025, shifting towards a more neutral policy stance. Additionally, government debt according to the IMF currently sits at 66.6% of GDP in 2025, while the IMF estimate a rise to 68.3% in 2026.  Larger fiscal deficits have caused an estimated increase of debt, but also a linkage to foreign currency through the country’s foreign indexed and foreign currency debt. However, a majority of liabilities are FDI based, meaning the risk of a sudden outflow from the economy is slim. Overall, sovereign non-payment risk continues to be assessed at medium-low. In addition, exchange transfer also remains at a medium-low risk. The Uruguayan Peso continues as a developing market currency, gaining stability since the start of 2025 alongside the country’s moderate monetary policy.

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