IMF sees steady Western Hemisphere growth as U.S. demand and commodity prices support region

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IMF Western Hemisphere growth

Highlights

IMF projects Western Hemisphere regional growth of about 2.25 percent for both 2026 and 2027, citing supportive external factors.
U.S. economic activity benefits from strong consumption, robust labor market, higher household wealth, and rising technology-related investment, despite a large trade and current account deficit.
South America is forecast to grow 2.1 percent in 2026 and 2.4 percent in 2027, with Argentina, Brazil, and Venezuela seeing improved prospects due to energy, commodity prices, and investment inflows.

Regional outlook and country trends

As reported by the International Monetary Fund, its October 2026 Regional Economic Outlook for the Western Hemisphere projects regional growth of about 2.25 percent in both this year and next year, with policymakers facing the challenge of turning current external tailwinds into longer-term gains.

In the U.S., activity is being supported by strong consumption, a solid labor market and household wealth gains linked to higher financial asset valuations. The IMF also says technology-related investment is accelerating, offsetting weaker investment in structures, although the import intensity of that spending and a strong dollar are contributing to a relatively large trade and current account deficit.

In Canada, trade uncertainty has led businesses to defer new projects, weighing on business investment through early 2026, though recent data is starting to show a rebound in investment and goods exports. Mexico is benefiting from strong U.S. import demand, particularly in electronics, while less restrictive fiscal and monetary policies are also supporting activity this year.

South America is projected to grow about 2.1 percent this year and 2.4 percent in 2027, helped by supportive global financial conditions, high energy and commodity prices, and stronger portfolio and foreign direct investment inflows. The IMF says Argentina's growth is expected to rebound into next year as demand gradually recovers, Brazil is seen expanding around 2.2 percent this year with a modest deceleration in 2027, and Venezuela is forecast to post strong growth this year and next on rising energy production and exports.

Our earlier article on Moody’s upgraded global growth outlook highlighted a more optimistic view driven by stronger household demand and a steadier labor market. It also noted that while reopening dynamics supported the recovery, inflation and ongoing supply-chain disruptions remained key risks that could still slow momentum in some regions and sectors.

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