Latin America Needs to Get Rich Before It Gets Old

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We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

•Latin America Needs To Get Rich Before It Gets Old

•The U.S. Leaves the OAS in the Hands of the Left

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The GCaM Team

Latin America’s demographic transition has arrived abruptly, catching the region by surprise. In a few short years, birth rates have fallen below the replacement rate, mirroring more drawn-out trends in wealthier nations. 

• However, unlike developed countries, Latin America is aging before building up the economic strength to sustain an older population. This shift poses serious long-term economic challenges, especially considering Latin American nations have expanded their welfare states beyond sustainable levels.
  
  

Panorama. For now, Latin America still enjoys a demographic dividend: a large working-age population relative to dependents, fueling economic growth. 

• This has contributed an estimated 0.5% to annual GDP per capita growth over the past 25 years. However, this advantage is rapidly fading.

• As the current workforce ages and birth rates remain low, the share of working-age people will peak by the 2030s and then decline. 

• Countries that fail to capitalize on this remaining window will face stagnation, with fewer taxpayers supporting an increasing number of retirees.
  
  

Why It Matters. Almost all Latin American countries are now below the replacement rate of 2.1 children per woman. The regional average is 1.8 children per woman, with Puerto Rico (0.88), Chile (0.90), and Uruguay (1.20) approaching the ultra-low fertility of countries like South Korea. These figures are even lower than those of aging European nations struggling to reverse demographic decline.

• This rapid fertility drop is unprecedented. Uruguay’s birth rate declined by 34% in a decade, while Argentina’s fell by 32% between 2016 and 2021. These are some of the sharpest declines across the globe.

• Economic growth will slow unless productivity improves. Historically, developed nations expanded welfare programs when their workforce was still growing. European welfare states began emerging in the 19th century and consolidated with the Baby Boom, for example.

• Latin America lacks this luxury. Without intervention, the region risks falling into a low-growth, high-dependency trap, where an aging society hinders investment and economic dynamism.
  
  

On the Radar. Even Central America, once thought to be an exception, is now showing signs of demographic slowdown. 

• Recent 2024 data indicates that fertility rates in several Central American countries have dropped below sustainable levels, challenging earlier assumptions of a long-lasting demographic dividend.

• Compounding this issue, migration is accelerating workforce shortages. This reduces the number of available laborers, creating potential economic stagnation and fiscal stress. 

• While remittances help sustain economies in the short term, they are not a substitute for a stable, productive workforce. It was formerly thought that high migration rates were an unmitigated good for the region, since they provided access to hard currency via remittances. This may no longer hold true.
  
  

Between the Lines. Latin America’s productivity growth has averaged just 0.9% annually, among the slowest rates worldwide. To compensate for workforce decline, the region must invest in technology, infrastructure, and education to raise output per worker.

• Beyond productivity, bringing more people into the workforce is essential. Many young Latin Americans remain underemployed or stuck in informal jobs. Female workforce participation also lags behind developed countries, despite fertility now being lower in many Latin American countries. 

• For example, if Brazil raised its employment rate by just 4%, its GDP per capita could increase by 9%. Such is the untapped economic potential of workforce expansion.
  
  

Bottom Line. Latin America’s demographic reality is shifting rapidly, and economic policy must adapt. The next decade represents the last opportunity to leverage a still-strong workforce before population aging becomes a significant drag on growth. 

• While the region is still young compared to developed regions, the window for action is closing fast. Those who prepare now will maintain economic resilience. Those who delay will face the hard realities of an aging, lower-growth future.
  
  
  

The regional left has taken control of the Organization of American States (OAS). Washington does not seem overly bothered by this turn of events.

Perspectives. On Monday, Albert Ramdin, Suriname’s foreign minister, was elected as the Secretary General of the OAS. Ramdin has enjoyed the backing of the Caribbean Community (CARICOM) since September 2024. CARICOM’s backing provided him with 14 of the 18 votes needed to secure the position.

• Recently, he gained Brazil’s support, aligning South America’s left-leaning countries with his candidacy. Brazilian President Lula da Silva’s endorsement prompted the only other contender—Paraguayan Foreign Minister Rubén Ramíre—to withdraw, as his bid was rendered hopeless.

• With the votes of CARICOM, Brazil, Uruguay, Colombia, Bolivia, and Chile secured, Ramdin’s appointment was a foregone conclusion; the March 10 election served only as a formality.

• Ramdin will take office on May 25, coinciding with an election in his native Suriname. He will head the OAS until at least 2030, although OAS heads are, barring great controversy, traditionally reelected to a second term.
  
  

Yes, But. Lula had promised Paraguayan President Peña Brazil’s support for Ramírez. Alongside Paraguay, Ramírez had the backing of Brazil and the United States. Such strong backing would have guaranteed his appointment. 

• Earlier this month, Lula visited Montevideo, where he met newly inaugurated Uruguayan President Yamandú Orsi, Colombian President Gustavo Petro, Chilean President Gabriel Boric, and Bolivian President Luis Arce.

• South America’s leading left-wing politicians used the meeting to signal their support for Suriname’s Ramdin, driving Lula to renege on his earlier promise to Paraguay’s right-wing government.

• Paraguayan President Santiago Peña was evidently incensed, releasing a statement saying that “abruptly and inexplicably, Paraguay was informed by friendly countries […] that they had altered their initial commitment to our nation and decided not to support Paraguay’s proposal after all.”
  
  

Why It Matters. Rubén Ramírez was a conservative, U.S.-aligned candidate, as well as a vocal critic of the Cuban, Venezuelan, and Nicaraguan regimes. Given Paraguay’s ties to Taiwan, he has also criticized China’s growing influence in Latin America.

• Ramdin does not share Ramírez’s anti-dictatorial zeal. When accepting his appointment, his remarks instead emphasized the importance of establishing a common front against climate change.

• China hopes to expand its sway in Latin America through its Surinamese protégé. As foreign minister, Ramdin has been instrumental in bolstering China’s presence in Suriname.

• Ramdin has expressed support for the Belt and Road Initiative, obsequiously adding that “there is only one China, and we will stand by what we have seen in other neighboring countries.”
  
  

Between the Lines. Lula and his allies abandoned Ramírez in a move against the United States. Peña hinted at this in his statement, noting: “Paraguay has always been a country that bases its positions on lofty principles and values, and it will not abandon them for an election or a particular circumstance.”

• That “circumstance” refers to Trump’s policies toward countries in the region, where Washington seeks to advance its direct interests. This implicitly means placing regime change on the back burner, much to some Latin American conservatives’ chagrin.

• Trump, however, seems unperturbed. Mauricio Claver-Carone, his special envoy for Latin America, has described Suriname as “a pro-American country that’s on the right path economically, that’s growing, that’s bringing in foreign investments [that are] non-Chinese.”

• Washington’s financial contributions to the OAS and its diplomatic clout make it impossible to win the secretary general role without U.S. support. Washington evidently calculated that Ramdin is not a large threat to the U.S. Conservative Latin American governments will think otherwise.