Latin America's economic growth is projected to decelerate in 2025, with real GDP expected to grow 2.2%, excluding Argentina and Venezuela, according to Swiss Re.
This marks a decline from an estimated 2.5% in 2024. Growth will vary across the region, with Brazil and Chile slowing to 2% real GDP growth after stronger-than-expected performance in 2024. Mexico's growth is expected to remain stable at 1.5%, while Colombia’s economy may improve to 2.4% as inflation subsides and monetary policy eases.
Swiss Re noted in its report that while Latin America is expected to outperform advanced economies, its growth will lag other emerging markets. Persistent structural challenges, such as low productivity, aging infrastructure, and fiscal vulnerabilities, continue to constrain long-term economic potential.
Risks to the forecast remain skewed to the downside due to sticky inflation and weakening external demand, alongside heightened geopolitical tensions impacting global trade.
Inflation rates have declined significantly from 2022 highs but remain near the upper limits of central bank targets. Consumer price inflation is forecast to average 4% in Brazil and 3.8% in Mexico in 2025.
While interest rate cuts in the United States could provide regional central banks with room to ease monetary policy, currency depreciation and core inflation pressures suggest a gradual approach to rate reductions. Brazil’s tighter monetary stance contrasts with anticipated rate cuts across other major markets in the region.
Swiss Re pointed to external pressures, including slowing growth in key trading partners, the US and China. Geopolitical tensions could exacerbate supply chain disruptions and trade policy uncertainties.
Chile and Mexico are particularly exposed due to their reliance on manufacturing exports to the US and copper exports to China, respectively. However, nearshoring trends could provide longer-term opportunities as companies reconfigure supply chains.
Swiss Re projects that total insurance premiums in Latin America will grow 3.8% in real terms in 2025, down from an estimated 7.6% in 2024. Non-life lines have benefited from hard market conditions, while life insurance products with savings components have seen gains from higher interest rates. While these tailwinds are expected to continue, premium growth will moderate in certain markets.
The life and health (L&H) segment is forecast to grow by 4% in real terms in 2025, compared to 8% in 2024. Property and casualty (P&C) premiums, excluding health, are projected to rise by 3.3%, down from an estimated 6.3% this year.
Over the long term, insurance premium growth in the region is expected to outpace economic expansion, continuing a trend observed over the past two decades.
Swiss Re highlighted the significant protection gap in the region, which totaled $151 billion in premium equivalent terms in 2023. Regulatory measures, such as the push for open insurance frameworks, are expected to enhance affordability and expand the insured base.
Commercial insurance pricing remains elevated in the region, with the composite price index increasing 3% in the third quarter of 2024, exceeding the global average, which declined by 1%. Casualty lines, particularly motor insurance, have driven pricing increases due to higher vehicle values and rising repair costs.
Property insurance rates also continue to rise, driven by frequent natural catastrophe events. Swiss Re noted risks from foreign exchange volatility, social inflation in markets like Mexico, and climbing medical costs as potential drivers that could extend current hard market conditions. These factors pose upside risks to pricing trends despite recent signs of moderation.
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