Latin America’s growth story: three developments investors should be watching
30 SEPT, 2026
Latin America is in the middle of a structural re-rating. Strong commodity exports, a resource base that few regions can match, diversification and a wave of geopolitical realignment are reshaping the investment case for the region – even as political noise continues to generate short-term volatility. For emerging-market fixed income investors, that combination of long-term potential and near-term uncertainty is exactly where active, country-by-country selection earns its keep.
What are the three top developments currently shaping the outlook for Latin America, and why do they matter for portfolios? Let's take a look.
1. Resource wealth is becoming a geopolitical asset, not just an export line
Latin America’s economic weight is rooted in its natural resources. Goods exports rose by an estimated 6.4% in 2025, driven by higher volumes of gold, copper and silver alongside resilient agricultural shipments. The region now accounts for more than half of global silver output, around 40% of copper, and roughly a third of the world’s lithium production.
The so-called Lithium Triangle – Argentina, Chile and Bolivia – holds over 60% of global lithium reserves, positioning it centrally in the supply chain for electric-vehicle batteries and energy storage. Argentina has ramped up production quickly, while Chile remains a long-established leader in both lithium and copper. Energy is following a similar trajectory: developments in Guyana, Brazil and Argentina are lifting output, with Brazil hitting record production and Argentina expanding its role as a gas exporter, including a recent liquefied natural gas agreement with Germany.
This resource base is attracting capital from multiple directions at once, including China’s growing footprint in lithium and renewed US and European interest in securing critical-mineral and energy supply. For investors, that convergence of demand is a structural tailwind – but one still concentrated in a narrow set of commodities, which keeps exposure to price volatility firmly in the risk column.
At the same time the region is diversifying. Manufacturing, financial services, renewable energy and tourism are gaining momentum. Nearshoring is strengthening Mexico’s manufacturing sector and countries like Costa Rica are home to high-value industries like medical devices. Digital finance is also expanding, while renewable energy is increasingly important with a high share of electricity generated from clean sources. Tourism, particularly in the Caribbean and Central America, has strongly rebounded.
2. US trade policy – from USMCA to the midterms – will impact nearshoring
On 1 July 2026, the mandated review of the US-Mexico-Canada Agreement (USMCA) concluded with the US declining to extend the pact for a further 16 years, despite Mexico and Canada favouring renewal. That is not withdrawal: the treaty remains in force, now on annual reviews through to 2036 rather than a settled long-term horizon.
The two bilateral tracks have diverged. US-Mexico talks remain difficult but functional, with a fourth round set for Washington in September. US-Canada talks fared worse, breaking down after the US imposed 50% tariffs on Canadian steel and aluminium, prompting Canadian retaliation from 8 September, which has led to uncertainty.
The second catalyst, the US midterm elections, still matters. A weaker showing for Trump-aligned candidates would likely support a more predictable path – favouring Mexico's manufacturing sector and Central America through nearshoring. With the renewal question already settled unfavourably, the midterms are now less about whether uncertainty persists and more about how contained it stays.
3. Argentina’s reform path is real, but far from risk-free
Argentina remains the region’s clearest example of high-conviction, high-scrutiny investing. President Milei’s tenure has been contentious – including repeated moves to bypass the legislature – yet the underlying trajectory is cautiously constructive. A multilateral-backed financial buffer and a recent credit rating upgrade have helped stabilise sovereign spreads and ease financing conditions, while fiscal balances continue to improve alongside more proactive funding strategies.
The risks, however, are far from resolved. Market access remains constrained, inflation is still elevated, and the reform strategy depends heavily on supportive global financial conditions persisting. With elections scheduled for October 2027, political risk around policy continuity and foreign-exchange management will stay firmly on investors’ radar well before votes are cast.
Why country-level selection matters
Latin America is well-positioned for long term growth but the investment case is not a uniform one. It is a region where sovereign fundamentals, reform credibility and political calendars diverge from one market to the next – precisely the kind of environment where active, research-driven credit selection adds value.
The bottom line
Latin America’s long-term growth case – built on resource wealth, nearshoring momentum and a gradually diversifying economy – remains intact. But the path there runs through US trade policy decisions, domestic reform credibility, and a set of structural headwinds that won’t disappear on their own. For investors, that argues for a responsive, active investment approach.
This article reflects the views of DPAM (Degroof Petercam Asset Management) as of the source material referenced. Marketing communication – investing incurs risks. Past performance does not guarantee future results. This content does not constitute investment advice, an offer, or a solicitation to buy, sell or subscribe to any financial instrument.
