Puerto Vallarta, Mexico - Organized crime is no longer just a public-security headache for Latin America and the Caribbean. It has become the region’s single biggest development hurdle, the World Bank warned Monday in its flagship Latin America and the Caribbean Economic Review (LACER). Unless governments curb soaring violence and criminal networks, the lender argues, the hemisphere will remain “trapped in a poor equilibrium” of low growth, high inequality and fragile institutions.
The Bank trimmed its outlook for regional GDP to 2.1 percent in 2025 and 2.4 percent in 2026, leaving Latin America and the Caribbean the slowest-growing bloc in the world. Analysts at the Washington-based institution link much of that under-performance to the direct and indirect costs of crime, which raise the price of doing business, deter investment and divert scarce public money from health and education to policing.
Those losses are not abstract. A recent Inter-American Development Bank study put the direct bill for crime and violence at 3.4 percent of the region’s GDP in 2022—almost as much as governments spend on education, and twice what they devote to social assistance.
While the region represents just 9 percent of the world’s population, it suffers fully one-third of all homicides. Over the past two decades the gap with the rest of the world has widened from 5.4-to-1 to eight-to-one in per-capita murder rates, the report notes. National figures vary wildly, from an average 38 killings per 100,000 inhabitants in Honduras (2018-2022) to 4-5 per 100,000 in Bolivia and Argentina.
A handful of countries—including El Salvador and Venezuela—have recently seen notable declines in lethal violence, but others, such as Ecuador and Haiti, are moving in the opposite direction, underscoring the fluid nature of criminal dynamics across the hemisphere.
The Bank traces the expansion of transnational gangs to the 2010s boom in global demand for cocaine, illegal gold and migrant smuggling, as well as to tougher enforcement campaigns that splintered established cartels and created violent power vacuums. The COVID-19 pandemic further entrenched criminal groups by allowing them to step into gaps in state services: in Colombia and Mexico, gangs distributed food and cash handouts; in Venezuela, the Tren de Aragua went from charging migrants “tolls” to running its own transport and lodging businesses.
In the short term, the World Bank urges governments to “strategically strengthen” prisons, police forces and courts, which are often corrupt or overwhelmed. Preventive work with youth at risk of gang recruitment should operate in parallel, the authors stress, or enforcement efforts will merely recycle offenders. Over the medium term, improving education quality, expanding formal job opportunities and boosting productivity are indispensable to raising the opportunity cost of crime and restoring public trust in institutions.
Acknowledging that criminal networks respect no borders, 16 governments—backed by the IDB, World Bank and other multilateral lenders—launched a regional security alliance in December 2024 that will pool data, target money-laundering hubs and upgrade policing standards with an initial US$1 billion war chest. The World Bank argues that such cooperation must be scaled up and institutionalized if the economic promise of the hemisphere’s 660 million people is to be unlocked.
