Surging copper prices, anticipated fiscal restraint, and recovering confidence have resulted in the strongest inflow of foreign capital in years, consolidating Chile’s narrative as a haven that draws global capital when investors elsewhere reassess risk.

International investors have been snapping up Chilean local-currency bonds at the quickest pace ever as higher copper prices, changing political expectations, and signs of fiscal consolidation fuel demand. Increased appetite for peso-denominated bonds is helping to strengthen the peso, drive down financing costs, and put Chile back among Latin America’s most favored markets. Chile attracts global capital to bonds for several reasons, but interest in Chile’s peso bonds has been particularly notable this year as it breaks a multi-year trend of low foreign investor participation and impacts key aspects of Chilean government financing and financial stability.

Foreign holdings of local-currency sovereign bonds surged to a record US$14 billion in November 2025, more than doubling the US$6.6 billion at the end of 2024. The increase has also far outpaced that of other countries in the region, as Chile captures investors’ attention after several years of cautious behavior by many large international investors.

Several factors are behind this turnaround. Higher prices for the red metal, as well as expectations of a shift toward more orthodox policies following President-elect José Antonio Kast’s election, are driving the rush into Chilean assets. Kast has promised to rein in public spending and outlined plans for fiscal consolidation.

The external backdrop is helping as well. With many investors saying U.S. assets have lost their luster, many are scouring emerging markets for better prospects. Chile’s status as an investment-grade economy with strong institutions and deep financial markets makes it stand out from its peers.

“The total return generated from both interest rates and the currency made Chilean local bonds one of the most attractive risk-return profiles in what has been a favorable environment for Latin American local markets,” Anders Faergemann, senior portfolio manager at PineBridge Investments, told Bloomberg. “We felt we had an opportunity in the CLP because it was mispriced relative to where we saw the fundamentals going,” he added.

Rates, currency, and markets

Evidence of the sustained capital inflows is already visible across a variety of financial indicators. The spread investors demand to own Chilean dollar-denominated debt over Treasuries has plunged to its lowest level in almost two decades.

Markets are rallying. Chile’s benchmark IPSA stock index touched a record this week, and the peso has soared. The currency has appreciated 11.6% versus the dollar in the past year and has added another 2.2% in the first weeks of January 2026. It currently trades around 880 pesos per dollar, its best level since February 2024.

Faergemann added that “when we started buying Chilean peso bonds in the summer of 2025, the Chilean peso had underperformed most Latin American currencies. However, it has since rebounded with the renewed investor focus on fiscal consolidation, which was reaffirmed with Kast’s victory speech the night he won the election.”

Appreciation of the peso, along with declining yields, lessens the Treasury’s debt service costs. It also improves conditions for the private sector by cutting borrowing costs and buttressing macro stability.

Fiscal adjustment and market expectations

President-elect Kast’s commitment to slashing US$6 billion in public spending during his first year-and-a-half in office has been critical in renewing investor interest. If carried out, it would mark the biggest fiscal tightening since the mid-1970s.

Peer economies offer few comparables, with Chile standing out for having trimmed its fiscal deficit last year while most of its neighbors are seeing public finances deteriorate. In Brazil, foreign investors’ holdings of local debt increased 15% during the first eleven months of the year; in Mexico, they declined 6%; and in Colombia, they increased 60% as of November, mostly due to “non-recurrent” transactions related to specific bond issuances.

“It stands out as one of the few countries in the world with an investment-grade rating, strong fundamentals, and some very nice tailwinds from a global perspective,” said Andres Perez, chief economist for Latin America at Itaú Bank.

Today, roughly 11.4% of the Chilean government’s locally issued debt is owned by foreigners. That’s the highest level since the second quarter of 2022 and well above the 8% share recorded at the end of last year. The figure now puts Chile back on par with its most attractive Latin peers.

The role of copper prices

But the rally also owes to rising copper prices, which jumped to an all-time high earlier this month and are currently up nearly 44% from last year. As the red metal accounts for roughly 50% of Chile’s exports and a meaningful share of tax revenues, higher prices boost the country’s balance-of-payments and fiscal accounts.

Prices have also helped narrow the current account deficit, which by the third quarter of 2025 dropped to its lowest level in four years. That helps solve worries about external sustainability and lowers financial fragility.

Faergemann points out that “foreign investors will continue purchasing Chilean local bonds unhedged going forward, and we believe recent gains will be sustained. This will reduce market volatility and reinforce the attractive positive carry-volatility trade.”

He noted that while “a chunk of the Chile rally has already happened, we believe that Chile has several of the themes that global investors are looking for right now: stability, strong fundamentals and improving terms of trade.”

As a result, yields on five-year peso-denominated bonds have fallen by 29 basis points since November and are currently around 5.08%, their lowest level in over two years. Declining rates are another way this renewed confidence is manifesting itself.

Reduced financing needs

Higher revenues from copper, coupled with lower spending, could mean Chile issues less debt going forward. The current fiscal budget anticipates the issuance of around US$17.4 billion, of which 70% would be in local currency and 30% in foreign currency. If there is fiscal consolidation, however, that amount could shrink.

“If copper prices stay high, then revenues related to mining should surpass forecasts,” Pérez added. He noted that higher revenues, along with lower spending, should result in a lower amount of needed financing.

Lower issuance also carries implications for investors. “If that supply goes down, then rates should continue declining,” said Mariano Álvarez, a fixed-income manager at LarrainVial.

Change of sentiment for Chile

While numbers tell part of the story, the phenomenon also reflects a change in sentiment about Chile specifically. After years of political turmoil and uncertainty over the country’s future direction, Chile is back on investors’ radar screens as one of emerging markets’ more reliable bets.

The flood of foreign money into Chilean local bonds does more than give markets depth_. It improves the government’s ability to finance itself, helps maintain a stable currency, lowers market volatility and lays the groundwork for higher levels of productive investment.

The difficult part now will be to prove investors right and keep capital flowing. For as long as the fiscal adjustment remains a promise rather than a reality, bets on Chile will be accompanied by skepticism. Chile attracts global capital unlike its regional peers by changing investors’ minds. Now it must show it can deliver.

Brazil continues to position itself as one of Mexico’s main opportunities for industrial expansion, particularly when it comes to the automotive and aerospace industries. This premise was reinforced during the webinar “Opportunities for Access to the Brazilian Market” hosted by Mexico–Brazil Chamber of Commerce (CAMEBRA), where specialists agreed on the existing productive complementation possibilities between Latin America’s two largest economies and explained how Mexico and Brazil strengthen collaboration.

Moderated by Miguel Ruiz Luna, President of CAMEBRA, the webinar was conceived with the purpose of connecting Mexican producers and exporters to “Brazil, one of the main markets but also one of the most strategic and complex.” Ruiz Luna mentioned that understanding regulatory nuances, industrial dynamics, the tax system, and commercial culture is required knowledge to not only enter but also scale operations in Brazil. He also highlighted that cooperation between both nations goes beyond trade exchanges and includes technology transfers, investments, and joint industrial projects.

Mexico’s Aerospace Industry: Creating a Global Platform

In his presentation, Luis Lizcano, Executive President of the Mexican Aerospace Industry Federation (FEMIA), expressed how Mexico has become a powerful aerospace producer platform in less than two decades. FEMIA counts more than 350 companies specialized in aerospace; strong clusters have been developed in states like Querétaro, Chihuahua, Baja California, Sonora, and Nuevo León; and there is a high degree of integration with both North American and European supply chains.

Mexico’s aerospace industry exported USD 10.7 billion worth of goods and services in 2024, and it is projected to keep growing at a steady pace to reach around USD 19 billion by 2030. This is attributed to the increased demand for aircraft parts, engines, aerostructures, wiring interconnection systems, and maintenance, repair, and overhaul services. “Cooperation with Brazil will allow us to open strategic doors such as maintenance, repair, and overhaul (MRO); advanced air mobility; space; and supply chain diversification, among others,” Lizcano added. “All of these sectors gain importance when taking into consideration global geopolitics that involve reshoring, nearshoring, and the search for reliable, certified suppliers that can also compete on cost.”

“The great results come from great processes.” This quote by Lizcano refers to factors such as excellence in operations, certifications, and long-term industrial policies. Mexico and Brazil strengthen collaboration as Mexico can offer its OEMs and suppliers’ global value chain integration, while Brazil can offer technological strength and final assembly capabilities for aircraft.

Mexico’s Automotive Industry: Opportunities for Two Powerhouses to Complement Each Other

Automotive has made Mexico one of the largest producers globally. “Automotive represents around 32% of Mexico’s total exports,” said Dr. Alberto Bustamante, President of the National Association of Automotive Sector Suppliers (ANAPSA). This industrial sector has even surpassed oil and tourism when it comes to relevance. Right now, Mexico is the fifth-largest producer and exporter of light vehicles as well as the biggest exporter of heavy-duty trucks in the world.

Another fundamental point made by Bustamante is the Economic Complementation Agreement No. 55 (ACE 55), which benefits both Mexico and Brazil by eliminating tariffs between the nations in the automotive trade. Exchanges between Mexico and Brazil totaled over USD 66 billion in 2025. But it is not only finished vehicles that are impacted by ACE 55. The agreement enables deep integration between original equipment manufacturers (OEMs), Tier 1, Tier 2, and Tier 3 companies, logistics companies, engineering companies, and design companies.

Now more than ever it is strategic for Mexican automotive companies to connect with Brazil since the industry is undergoing major changes derived from the shift to electrification, increased digitalization, autonomous driving technologies, and more rigid environmental policies. By complementing each other, Mexico can offer competitively priced components, and Brazil can offer scale, engineering capabilities and access to South America.

Opportunities and Challenges to Enter the Brazilian Market

Gerson Secomandi, Vice President of Industrial Transformation for Latin America at ReThinkingWorks, provided insights from Brazil’s perspective. He mentioned that Brazil’s auto parts industry is one of Latin America’s largest, with a significant characteristic: its aftermarket. Parts required to maintain or repair a car account for almost 70% of total sales. This is largely due to Brazil’s vast vehicle fleet and long car ownership cycles.

The challenge with this industry is what Brazilians refer to as the “Brazil Cost”, which includes high taxes and a very complex tax system, bureaucratic customs operations, fragmented regulations, and high logistics and infrastructure costs. “All these challenges, however, are opportunities for companies that can bring efficiency, advanced manufacturing capabilities, lean processes, and technology,” Secomandi pointed out.

Companies that have experience with automation, digital transformation, ESG factors, and have proven processes to optimize cost structures are more likely to pursue entering Brazil through exports, alliances, or joint ventures. Setting up manufacturing facilities is also an option for Mexican companies wanting to do business in Brazil.

Brazil’s Aerospace Industry: Diversification, Technology, and Sustainability

Mathias Peter Hermann Mangels, President and Chief Revenue Officer of ReThinkingWorks, commented on Brazil’s aerospace industry, saying that Brazil is one of the five largest producers of commercial aircraft worldwide. “The aerospace industry in Brazil is mature, export-oriented, and supported by technological poles such as São José dos Campos, which harbors a large cluster of engineering firms, research institutions, and specialized companies.”

In aerospace, Brazil is looking to diversify its suppliers, implement advanced manufacturing technologies, and accelerate the adoption of digitalization and automation. Sustainability is a key priority as well, as there is an interest in reducing emissions and improving fuel economy. Mexican aerospace companies that are already EASA certified and have knowledge in global value chains will be able to provide value-added products and services.

Connecting Companies to Latin America’s Third Largest Economy

Manuel Reta with ATSC finished the webinar by presenting “Go to Market Brazil,” a methodology created by ReThinkingWorks to help companies enter Brazil. The methodology covers topics such as regulations, potential partners, localization, setting up operations, and more. It’s available in both book and online versions.

Go to Market Brazil offers companies a step-by-step guide to help them focus on reducing risk and accelerating entry into Brazil while organizing their internationalization process. This allows companies to not only strengthen bilateral ties but also learn what exact steps they should take, whether that be exporting, establishing a distribution agreement, or producing in Brazil.

Mexico and Brazil have more opportunities than just automotive and aerospace. Other industries with opportunities for collaboration include health and wellness, energy, beauty and cosmetics, advanced manufacturing, fintech, and professional services. Mexico–Brazil relations continue to strengthen to create a better Latin America and allow the region to compete on a global scale.

Business chambers applaud the new agreement between Guatemala and the United States.

Guatemala’s private sector hailed the signing of a new agreement between Guatemala and the United States related to infrastructure projects through technical cooperation, which business chambers anticipate will promote investment, job creation, and improve competitiveness.

“The recent signing of the agreement between Guatemala and the United States geared toward technical cooperation to carry out important infrastructure works has been received very positively by Guatemala’s private sector,” said representatives of the country’s main business chambers.

Organized private sector representatives commented on the economic, social, and investment benefits that will be derived from the binational agreement, highlighting the generation of formal employment and new opportunities to improve competitiveness as key benefits of the accord.

Guatemalan business chambers have reinforced their statements of support for the agreement with the United States by highlighting how the pact will serve to boost confidence in the country’s institutions and signal continuity of policies aimed at economic modernization.

The United States Army Corps of Engineers will participate in Guatemalan infrastructure projects

Last week, the Guatemalan government and the United States Army Corps of Engineers (USACE) signed an agreement to begin carrying out studies for the development of strategic infrastructure. The goal is to improve road connectivity through key routes and revive a rail corridor between Puerto Quetzal and Escuintla.

The planned investment is estimated at around US$110 million, which will be directly funded by Guatemala. The United States, through USACE, will provide technical cooperation as well as technical assistance and knowledge based on worldwide best practices in project design and execution.

From the viewpoint of Guatemala’s private sector, technical cooperation with USACE adds value to the initiative and credibility. Both elements, say business leaders, will help minimize risks and ensure transparency during project implementation, while also increasing the likelihood that projects will be completed on time and within budget.

“The presence of USACE provides certainty to this type of project since it is an entity of the US government that has the technical capacity and experience to develop megaprojects,” the Coordinating Committee of Agricultural, Commercial, Industrial, and Financial Associations (CACIF) said in a statement.

CACIF views the agreement signed between Guatemala and the United States as “an important step” to improve key roadways and connectivity, conditions that businesses say are vital for making Guatemala more competitive internationally and increasing the flow of investment that can create jobs.

CACIF has also pointed out that technical cooperation with the United States will not only benefit road infrastructure and logistics projects, but will also contribute to consolidating key infrastructure related to foreign trade and domestic production.

Better roads and logistics routes, ports, and highways are part of the necessary conditions to lower costs for exporters and open up more opportunities for Guatemalan products in foreign markets, according to the statements made by CACIF and other chambers.

“The modernization of Puerto Quetzal is a historic milestone that will allow Guatemala to take its place in value chains as a reliable logistics hub,” CACIF previously commented on the initiative to update infrastructure at the country’s largest port.

In a similar statement, the president of the Chamber of Industry of Guatemala (CIG) highlighted what represents the second agreement signed with the United States that seeks to boost the modernization of Guatemala’s infrastructure.

According to CIG, the technical cooperation agreement will allow improvements that facilitate investment and increase productivity while improving connectivity between production centers and ports or borders.

“These actions contribute to building a prosperous country and more sustainable future for the generations to come,” CACIF underscored in its statement.

“We want to continue being reliable partners in strategic supply chains and in joint work to mitigate migratory flows,” CACIF continued, referring to one of the stated goals of the cooperation agreement signed between Guatemala and the United States.

Guatemala Trade Agreement with the United States Opens Market Access for Exporters

The agreement signed last year between Guatemala and the United States, known as the Reciprocal Trade Framework Agreement, has also received support from the private sector.

The trade agreement signed with the United States seeks to return preferential tariffs to the majority of exports sent to the North American market. Commercial sectors and exporters have long requested the restoration of this agreement.

Business chambers noted that the trade agreement with the United States opens an opportunity to attract new investments, boost domestic production, and strengthen trade ties with Guatemala’s main export market.

Last year, the United States purchased more than US$10 billion worth of goods from Guatemala. The country is also one of the leading sources of foreign direct investment for Guatemala.

“The CACIF highlights that with the entry into force of the trade agreement with the United States, over 70 percent of the products exported from Guatemala to that market will be tariff-free,” the business umbrella group added in a statement.

Increased market access and infrastructure are two facets that, according to CACIF, work in synergy to boost Guatemala’s development. Improvements to ports, highways, and logistics help reduce the cost of production and exporting; improved access to the United States allows exporters to increase their sales.

Business leaders have praised the restoration of preferential tariffs with the United States as a sign of confidence in Guatemala’s productive sector and its ability to comply with regulations related to quality, labor, and production.

The country conveys confidence through legal stability, but it must overcome certain disadvantages amid the new paradigm emerging across Latin America.

Uruguay’s push to attract Foreign Direct Investment (FDI) is one of the government’s core priorities for the coming years, although it will have to contend with a far more competitive regional environment.

Predictability and the transmission of confidence stand out as national assets in the effort to attract both domestic and foreign investors. However, the economy also has “fine print,” associated with internal costs and competitiveness. As Uruguay repositions its economy, these structural challenges are becoming more visible.

In a turbulent global context, the ability of South American countries to attract investment will be crucial. Examples include Paraguay reaching investment-grade status by the end of 2025, the potential consolidation of macroeconomic stabilization in Argentina, and Chile’s low-interest-rate cycle, which is making it increasingly attractive.

A more competitive region

“The era when Uruguay attracted investment by default is over,” summarized public accountant and financial analyst at Nobilis, Ezequiel Gutiérrez, in recent statements, noting that “today the region challenges us with much more aggressive competition.”

When examining changes in neighboring countries, he argued that Paraguay “has undergone the most relevant structural shift, because it validates its institutional security before the world. It no longer offers only low costs and minimal tax burdens, but has now become a safe destination for the real economy, directly competing for industrial investment.”

Regarding Argentina, he observed that “if it manages to consolidate its macroeconomic stabilization, it offers potential profitability through accelerated recovery and a market size that Uruguay simply cannot match.” Meanwhile, he stated that Chile “continues to apply pressure with its financial depth, competing for corporate capital.”

In short, he stressed that for Uruguay, “selling legal security alone is no longer enough to avoid losing ground to cheaper, more profitable, or more financially sophisticated competitors.” As Uruguay repositions its economy, he argued, the country “is compelled to improve productivity and reduce its country cost.”

A similar perspective, though with nuances, was offered by Balanz financial advisor Alan Babic. Speaking to this outlet, he acknowledged that “one could say Paraguay might in some way be ‘the new Uruguay,’” but cautioned: “It still has a path to walk.”

In terms of certainty, he noted that Uruguay “is backed by its history” and predicted that abrupt changes are unlikely. “I think it’s actually the opposite: investors will increasingly have more alternatives and will be able to diversify their portfolios. Rather than leaving Uruguay or Argentina, they will have a new investment option, and that’s positive for the region.”

Uruguay’s strengths and weaknesses

Babic focused on Uruguay’s strengths in attracting FDI, highlighting that it has “historically conveyed confidence to investors,” citing events such as the 2002 crisis: “It paid its debt even in bad times, and that builds trust.”

“Uruguay remains investment grade, has achieved inflation within the target range, and is doing its homework. Low inflation in pesos and a peso that has strengthened against the dollar are factors investors can clearly see,” he emphasized.

For his part, Gutiérrez identified “predictability in an uncertain global context” as the country’s main asset, grounded in “an investment environment based on legal certainty and regulatory stability.” Referring to these “clear rules of the game that transcend political and electoral cycles,” he added that investment-grade status positions Uruguay as “a fly-to-quality refuge,” facilitating access to financing on competitive terms.

He also highlighted existing instruments such as the Investment Promotion Law and the Free Trade Zone regime, which he described as “powerful mechanisms for attracting capital, prioritizing asset protection and fiscal predictability.” These tools are central as Uruguay repositions its economy in an increasingly demanding investment landscape.

On the downside, he identified the cost structure as “the fine print” of the economy. Uruguay is a dollar-expensive country, a reality that constantly erodes the profitability of the export sector and tourism. The so-called ‘exchange-rate lag,’ along with high energy and labor costs, is a barrier to entry that is difficult to ignore,” he analyzed.

He also pointed to a “scale limitation,” noting that “the domestic market is small, which forces any ambitious investment project to be export-oriented from the outset, since local consumption alone cannot justify large volumes.” To a lesser extent, he highlighted the need to “monitor labor market rigidity, which often reduces the agility required to compete with more flexible economies.”

Global conditions and the Mercosur–EU agreement

Regarding the tense global outlook, the Nobilis analyst indicated that key risks include “the high level of debt in developed economies, particularly the United States and Japan; geopolitical tensions between the U.S. and China, including episodes of tariff wars and competition for technological leadership; and a potential inflationary surprise that could force a reassessment of monetary policy.”

“This context tends to increase volatility in financial markets and reinforces the need to adopt more selective and defensive strategies, with proper diversification and active risk management,” he added.

Meanwhile, Babic emphasized that the signing of the Mercosur–EU agreement could serve as a catalyst. “In Latin America, countries are predominantly exporters, and any free trade agreement will generate more business, more jobs, and more companies setting up in the region. That’s positive, because the more business and opportunities there are, the more everyone benefits,” he summarized.

Can tax changes affect investment?

When asked about tax changes linked to the national budget, Gutiérrez argued that they “do not alter the fundamental drivers that explain Uruguay’s attractiveness as an investment destination.” He contrasted this by noting that “more than the specific tax level, investors assess a predictable and stable fiscal framework, which is central to medium- and long-term decision-making.”

While he stated that Uruguay “retains a relative advantage in the region,” he urged close monitoring of “the marginal impact that any tax adjustment might have, especially when competitiveness is a sensitive factor.”

Babic acknowledged that “there have been client inquiries regarding the changes,” but clarified that, being only the third week of January, “it is too early to draw meaningful conclusions.” Nonetheless, he emphasized that “both the Ministry of Economy and Finance (MEF) and the Central Bank of Uruguay (BCU) are aligned in continuing to promote investment in pesos, and they are demonstrating this through concrete actions.”

Sectors expected to gain momentum

When identifying the sectors expected to be most dynamic, the Balanz advisor pointed to real estate, stating that “the property market has become very strong in recent times,” and highlighted the development potential of the local capital market. “Increasingly, what used to be purely dollar-based investment is now possible in pesos.”

“Since the peso is a trusted currency, it offers that opportunity, and there are more and more alternatives for companies. The BCU is also promoting peso-denominated investments, and at Balanz we have already helped finance several companies and will continue working to expand the market,” he noted.

In parallel, Gutiérrez combined “opportunities with a more selective and defensive approach,” predicting that “the economy will be driven by infrastructure investment linked to artificial intelligence, although with uneven expectations across different market participants.”

For a moderate-risk investor, he recommended “prioritizing fixed income, particularly sovereign and corporate investment-grade bonds, supported by a scenario of more contained inflation and potential rate cuts.” He added that “higher-credit-risk debt, including high-yield and emerging market debt, can complement portfolios, provided it is carefully selected.”

By contrast, in equities, he advised “controlled exposure, with a stronger focus on value stocks in the United States and other developed markets,” while urging caution in technology segments linked to artificial intelligence. Finally, he suggested that “alternative assets such as private credit, infrastructure, and real estate can provide diversification and help reduce portfolio volatility,” reinforcing the strategic adjustments underway as Uruguay repositions its economy.

As part of its quarterly regional economic projections, the Institute of Economics and Business Development (IEDEP) of the Lima Chamber of Commerce (CCL) estimated that Peruvian GDP will grow 3.1% by the end of this year. Its performance will mainly be affected by domestic demand, as well as by the continued dynamism of the manufacturing, construction, commerce, and services sectors.

“The aforementioned estimate would allow Peru to position itself as the regional economy with the third highest rate of growth, only behind Paraguay and Argentina,” said IEDEP head Óscar Chávez in a press release. That level of growth will place the economy above several of its peers despite being slightly lower than the projected 3.2% for this year. IEDEP added that the local economy will continue to enjoy a favorable macroeconomic environment next year, defined by low inflation, stability of the currency exchange rate, and continuity of monetary policy.

“In that sense, purchasing power should be maintained while private investment would be encouraged, with credit continuing to grow at good rates,” reads the statement. These factors allowed Peru to partially counter headwinds affecting several of its peers, including fiscal adjustments, delayed recoveries, high inflation, rising interest rates, and external uncertainty.

Headwinds also include political matters, particularly how the presidential election process develops. While there is optimism regarding who will emerge as the winner, analysts point out that it could generate hesitation among investors and throughout decision-making processes in both public and private spheres.

Changing composition of growth

As noted by IEDEP, another relevant characteristic of Peru’s economic scenario is the change in the composition of GDP. Growth during 2026 would exhibit less participation from extractive industries and greater contribution from sectors linked to the domestic market.

“In fact, this marks the gradual recovery of internal demand supported by improvements in labor market conditions and growth in household income and business activity,” said the CCL think tank.

Non-primary sectors of the economy

• Manufacturing: This sector will expand 2.7% as a result of higher private spending and increased capacity utilization. Manufacturing industries are gradually recovering confidence and have experienced an increase in sales.
• Electricity, gas, and water: These utilities will grow 3% in line with economic activity. Growth in these industries will be driven by higher spending from commerce, households, and industries, as well as projects to expand and improve service in urban areas and some semi-urban areas.
• Construction: After several years of sluggish activity, construction should continue to gather steam and grow by 3.6% in 2026 thanks to private investment and, to a lesser extent, higher public investment. Moreover, the good execution of projects launched in previous years will continue contributing to activity, such as real estate development, commercial construction projects, and infrastructure that begins to take off.
• Commerce: This sector will benefit from the dynamism of private consumption and higher levels of formal employment, growing 3.5% next year. Improvements in both variables, together with benign inflation, should support retail and wholesale activity nationwide.
• Services: Among the sectors analyzed by IEDEP, services should be the strongest performer, expanding 4% as a result of the recovery of some labor-intensive industries and higher incomes. Transportation, tourism, hotels and restaurants, business-related services, as well as personal services industries, should continue gaining steam as mobility improves.

Primary sectors of the economy

• Agriculture: Led by basic grains and permanent crops, this sector is expected to grow by 3.3% during 2026, albeit at a more moderate pace than during 2025. Stable domestic demand and exports will help keep activity afloat.
• Fishing: Fishing is expected to rebound 2.8% as a result of improved oceanographic conditions, benefiting both industrial and artisan fishing.
• Mining and hydrocarbons: Activity in mining and hydrocarbon exploration will continue losing share and grow only by 1.2% in 2026, limited by the lack of start-ups of large mining projects, as well as operational restrictions affecting some existing mines.

Activity for the first months of 2026

IEDEP also presented figures for sectoral activity during the first trimester of next year:

• Commerce: 4.4%
• Services: 4.1%
• Agriculture: 7.7%, as a result of favorable production campaigns.
• Mining and hydrocarbons: -0.6%
• Construction: 6.9%, as a result of greater advanced execution of investment projects.
• Manufacturing: 5.9%

Taking into account the different segments of spending, domestic demand will remain the main driver of growth during the first few months of the year, growing by 5.5% as a result of healthy expansion in private consumption. Private investment would grow by 9.2%, buoyed by improved confidence as well as greater capacity and projects initiated towards the end of 2025.

Public investment would increase by 5.6% as it gears up following projects carried forward from last year, as well as the entry of the new fiscal year. In the external sector, exports will grow by 1.5% as mining and hydrocarbon shipments lag, while imports will grow at a faster clip of 6.7% as they are supported by greater consumer spending and demand for capital goods (equipment) associated with higher investment levels.

“In general terms, the projection presents robust growth that is explained fundamentally by internal demand, anticipating a slowdown in the growth rate as we advance in quarters and the economic cycle normalizes,” Chávez concluded