By Rodrigo Campos
April 17 (Reuters) – The war in the Middle East is likely to widen economic differences across Latin America and the Caribbean, giving some short-term support to oil exporters while worsening the outlook for tourism-reliant Caribbean economies and energy-importing countries in Central America, the IMF said on Friday.
The warning, issued in a blog post, follows the release earlier this week of the global lender’s updated World Economic Outlook, which projected that the Latin America and Caribbean region would grow 2.3% in 2026, little changed from 2.4% in 2025, before picking up to 2.7% in 2027. Brazil, the region’s largest economy, is forecast to grow 1.9% this year, while Mexico is expected to expand by 1.6%.
The IMF said the region had started 2026 in relatively solid shape, with inflation in many countries near target and growth holding close to trend. But it said the war had become a fresh external shock, driving swings in market sentiment, tighter financing conditions and sharp moves in commodity prices.
On Friday, the price of both Brent and WTI crude oil tumbled more than 10% after Iran’s foreign minister said passage for all commercial vessels through the key Strait of Hormuz was open during a ceasefire. Yet prices for both benchmarks are up roughly 45% so far in 2026.
The IMF, which is holding its spring meetings in Washington this week, said the clearest winners, at least in the short run, are oil-producing countries. Argentina, Brazil, Colombia, Ecuador, Guyana, Trinidad and Tobago and Venezuela are among those that have benefited from higher energy prices, which have lifted export income, supported public finances and eased pressure on their external accounts. But the global lender also warned that even in those economies, households would still be hit with higher fuel and food prices.
The hardest-hit economies are likely to be Caribbean countries that depend heavily on tourism. The IMF said those markets combine high debt with large energy import bills, leaving them especially exposed to another jump in oil prices. Central America also faces a broad hit from costlier energy, although some countries may get partial relief from bigger use of renewable power.
The IMF’s broader message was that the story in the region will not be one of growth alone. It said inflation will rise as higher fuel, transport and food costs feed through to consumers, putting the biggest strain on lower-income households. Countries that rely heavily on foreign financing also could come under added pressure as investors turn more cautious.
Inflation in the region is expected to rise 6.6% this year from 6.5% in 2025, before decelerating to 4.2% in 2027, the IMF said.
The IMF urged governments and central bank policymakers not to waste the credibility they built after the post-pandemic inflation surge. It said countries with firmer public finances and clearer policy frameworks would be in the best position to handle the shock, and warned against broad fuel or food subsidies, arguing that any support should be tightly aimed at vulnerable families and businesses.
(Reporting by Rodrigo Campos in New York; Editing by Paul Simao)
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