The ongoing military conflict in the Middle East has triggered a fresh wave of global energy market volatility, and the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) has issued a new warning about the spillover risks that threaten regional economic stability. While the bloc notes that Latin America and the Caribbean (LAC) enters this period of uncertainty with a more resilient macroeconomic footing than most other global regions, the ripple effects of elevated fuel costs still pose significant downside risks for inflation, fiscal health, and trade balances across the bloc.
At the core of ECLAC’s assessment is the uneven impact of soaring oil and fertilizer prices, which have been pushed upward by the Middle East conflict. As energy costs rise, transportation and logistics expenses across regional supply chains increase, passing higher costs to consumers and eroding household purchasing power across the board. But the economic fallout is not shared equally: net hydrocarbon-exporting nations stand to gain from inflated export revenues, while energy-importing countries face deepening economic pressures.
Among the most vulnerable economies are those in Central America, plus Haiti and the Dominican Republic. ECLAC projects that if crude oil prices hold at 25% above 2025 levels through 2026, the combined trade balance for these three groups of economies could deteriorate by an amount equal to 0.9% of total gross domestic product. For governments that already maintain broad consumer fuel subsidies to soften price shocks, the sustained higher energy prices will add new, unsustainable pressure to national budgets, further straining fiscal positions already weakened by years of post-pandemic recovery efforts.
Even amid these risks, ECLAC has stood by its baseline regional economic projections for 2026. The organization forecasts that average regional GDP will grow by 2.2% next year, with annual inflation settling at around 3%. Critically, the commission also noted that current projections assume average energy prices will remain at least 25% higher than 2025 levels through 2026, no matter what progress is made in Middle East peace negotiations. This expectation of persistent energy price elevation underscores the long-term uncertainty that regional economies must prepare for in the coming months.