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Latin America Business: Worst in 2025
The worst news in Latin America business this year.
BY LATINVEX EDITORS
The worst events in Latin American business this year, according to Latinvex editors.
#1 MEXICO’S TOUGH YEAR
Although it was able to avoid a much-feared recession, Mexico has little to celebrate this year, as its economy likely will grow by 0.6% or less, according to estimates from The World Ban and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Growth has been hurt by a combination of factors, including constant tariff threats from the United States, its largest trading partner, and the implementation of a widely-criticized judicial reform that elected judges (including for the Supreme Court) directly and is seen as significantly undermining the rule of law.
Both those factors, in turn, have undermined potential foreign investments in Mexico.
Since January, President Claudia Sheinbaum has been in a near-permanent crisis mode in terms of relations with the United States, which accounts for 80% of its exports and is the origin of more than $60 billion in annual remittances.
#2 PETRO DISASTER
This marked yet another disastrous year for Colombia thanks to the combined mismanagement and ideologue-driven policies of President Gustavo Petro.
The Colombian leader has a particular talent for creating rather than solving problems, both at home and abroad.
In the most recent crisis, he has practically ruined the country’s financial regulator after forcing it to accept his proposal to force Colombia’s pension funds to repatriate about 125 trillion pesos ($33 billion) invested abroad within just six months.
Technical staff at the regulator warned that such a move could generate market, liquidity, and counterparty credit risks; might raise concerns about breaching contractual agreements with private equity funds, and could adversely affect investment returns for pension savers, Bloomberg reports.
However, instead of listening to their advice, they were forced to resign.
Petro has also continued to systematically weaken state oil company Ecopetrol – once considered one of the best-run state oil companies in Latin America.
Its net income in the third quarter was down nearly 340% from the same period last year. That follows a 27% decline in profits for all of 2024.
Now Petro is trying his best to weaken Ecopetrol’s bottom line further.
On February 3, Ecopetrol formally agreed with Occidental Petroleum Corp to extend the development plan of Rodeo Midland Basin LLC, located in the Permian Basin.
The very next day, Petro ordered Ecopetrol to cancel the agreement.
Experts say the sale of the Texas business will dramatically cut Ecopetrol’s revenues and profits.
In July, Colombia’s Mines and Energy Minister Edwin Palma said the government planned to buy Monomeros, a troubled petrochemical firm in Colombia owned by Venezuela’s government.
However, in September, Ecopetrol’s chair Monica de Greiff announced that US sanctions would block any such deal.
The following month, de Greiff – a well-respected business leader and former justice minister — resigned from her board job after fighting Petro’s plan for the Permian sale, the Monomeros purchase and changing Ecopetrol’s statutes to include a representative of the company’s workers (as Petro and Palma have supported).
Ángela María Robledo, a psychologist who was Petro’s vice-presidential running mate in 2018, was named new chair of the board in a move seen as weakening the professional standards of the oil company’s governance.
Meanwhile, there have been reports that Petro has wanted to name Palma as Ecopetrol CEO, a move that would be illegal, according to both the company’s own statutes and Colombian law.
Apart from his ideologue-driven agenda, Petro is also known for his lack of basic management skills, often arriving significantly late to formal meetings or canceling them at the last minute for no valid reason.
To top it off, he appears to hold a record in Colombia in terms of changing his cabinet. According to La Republica, Petro has named a total of 62 ministers during his 40-month administration. He planned to make yet another change (of justice minister) last month, but had to cancel as his candidate didn’t pass a health test.
By comparison, President Juan Manuel Santos made 61 changes during his full 4-year/48-month term, while the governments of Ivan Duque and Alvaro Uribe both had significantly less churn, with 40 and 37 changes, respectively.
#3 ARGENTINA’S FX PROBLEM
Apart from inflation, Argentina has another major problem: The volatility of its currency. In October, just as President Javier Milei was preparing for crucial midterm elections that could strengthen or weaken his reform agenda, there was another massive run on the peso.
With polls showing Milei could lose the elections, the Trump Administration took the unusual step to provide a $20 billion lifeline to Argentina and would additionally “directly” purchase Argentine pesos. There was even talk about a $20 billion additional loan from private US banks, which in the end was seen as unnecessary.
Ironically, the peso crisis would have been avoided if Milei had followed through on his 2023 campaign pledge to dollarize. He later backtracked after following recommendations by his economic team led by Finance Minister Luis Caputo, which instead favored keeping the peso and permitting it trading under a strict set of bands. As a result, the peso is seen as overvalued even after repeated runs by the market.
Private sector economists have repeatedly called for Milei to change his currency policy. Money managers say Milei’s reluctance to let the peso float risks constraining growth and foreign currency inflows at a time when Argentina is trying to consolidate stability, Reuters reports. Investors also caution that maintaining a rigid FX regime could deter broader foreign direct investment from sectors beyond commodities.
“To trigger a boom in investments, the market says you need to scrap the currency band system and let the currency float,” Ramiro Blazquez, a Buenos Aires-based StoneX strategist, told Bloomberg.
Maurice Obstfeld, a Senior Fellow at the Peterson Institute for International Economics, concurs.
“Milei’s reform efforts succeeded beyond expectations until recently and were worthy of support when the International Monetary Fund launched a new program last April… but to move forward, he will need a new monetary framework based on exchange rate flexibility and probably much more multilateral financial support,” he argued in a commentary. “A more flexible exchange rate would allow the BCRA [Argentina’s Central Bank] to orient monetary policy toward supporting growth rather than maintaining an artificially strong currency.”
# 4 MORE PERU CHAOS
…and then there was yet another president.
Poor Peru. In seven years, the country has seen seven presidents. Not exactly an ideal environment for local and foreign investors.
And many of the longer-sitting presidents typically named several different cabinets, weakening private sector contacts with the key ministers and their top staff.
In October, Congress president José Jerí was sworn in by lawmakers as Peru’s new president less than an hour after unanimously voting to remove President Dina Boluarte, as anger mounted over rising crime and accusations of corruption, Reuters reported.
Elections are scheduled for April next year, with a new president taking the reigns in July. And the bad news is that so far there is no clear winner. No candidate boasts more than 10% and a third of Peruvians prefer not voting altogether.
Among the top three candidates is perennial presidential candidate Keiko Fujimori, daughter of Peru’s past president Alberto Fujimori. Keiko is the chief architect of Peru’s political chaos since she forced then-president Pedro Pablo Kuczynski out of office in March 2018, less than two years into his five-year mandate.
Since then, not a single Peruvian president elected popularly has been able to complete their term.
The political instability came after years of Peru shining as a macro economic star in Latin America before the chaos eventually also hit economic metrics.
#5 ECUADOR REMAINS UNSTABLE
Ecuador has in recent years seen a strange phenomenon. It has had two business-friendly presidents, but both have been undermined by weak authority.
Current president Daniel Noboa assumed office when Guillermo Lasso resigned in November 2023 amidst impeachment threats from Congress. Investors had been bullish on Lasso, a former banker, when he became president in 2021, but he quickly became ensnarled with Congress, where he lacked a governing majority.
Like Lasso, Noboa was welcomed by investors. Although he is young and has lacked any significant political and business experience he hails from an important business family in Ecuador and has favored business-friendly policies.
In April, Noboa won the second round of regularly scheduled presidential elections for a full four-year term. The results were warmly welcomed by the business sector who saw Noboa with a strong mandate to implement needed reforms.
However, last month Noboa suffered a defeat when all four of his proposals were rejected by voters. The measures would have authorized foreign military bases in the country to help fight organized crime, reduced the size of the legislature, cut mandatory political party financing; and convened a Constituent Assembly. The share of “No” votes ranged from 53.1% to 61.8%, contradicting pre-referendum opinion polls and the President’s approval ratings of about 55.5%.
“The referendum highlights ongoing governability challenges,” Fitch Ratings pointed out. “The four “No” votes diminished the President’s personal political capital and could hinder alliance-building in the National Assembly to secure majority support to pass legislation. The referendum result compounds uncertainty over prospects for further key reform initiatives, including efforts to attract investment and fiscal measures.”
Added to the continued political uncertainty, is the growing insecurity problem.
“Investors like Noboa’s economic policies but worry about the disruptive power of organized crime,” John Price, Managing Director of Americas Market Intelligence, wrote in a recent analysis.
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