Latin America and the Caribbean (LAC) can seize opportunities in a continuously changing global economy by deepening regional and international integration, diversifying trade partnerships and capitalising on its strengths in renewable energy, critical minerals and food production, according to the OECD Latin America Economic Outlook 2026: Deepening Integration into a Changing Global Economy, launched recently at the Ibero-American Business Summit in Madrid.
The report highlights the region's strong foundations to take advantage of changes in global demand, particularly for green and digital new technologies. Renewable energy accounts for 64.3% of electricity generation in LAC, more than double the global average of 31.9%, while the region holds 48% of global lithium reserves. Rising demand for critical minerals, food and clean-energy technologies also present new opportunities for economic transformation and growth.
However, the report finds that the region remains insufficiently integrated into regional and global value chains. Only 13% of LAC's participation in global value chains occurs through regional linkages, compared with 49% in the European Union and 52% in East and Southeast Asia. Intra-regional trade has the potential to increase by 6 percentage points of GDP, while 10% of intermediate inputs currently imported from outside the region could be sourced within LAC.
LAC has opportunities to expand trade with partners such as ASEAN and Africa, which account for just 2.9% and 1.7% of LAC goods exports, respectively. The Outlook thus sees room for expansion into new markets while also deepening trade ties with established partners.
The Outlook also points to expanding opportunities linked to the green transition. Clean-energy investment in the region has grown by nearly 25% since 2015, while global demand for lithium is projected to triple between 2024 and 2040. Demographic change and advances in artificial intelligence could create additional avenues for growth, productivity and economic diversification.
The Outlook also highlights the potential of foreign direct investment (FDI) to support a shift to higher value-added activities, for example in medium-to-high-technology manufacturing. A 10% increase in FDI is linked with a 0.16 percentage point rise in the share of domestic value-added reaching global markets.
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