In Central America, crime not only takes lives—it suffocates economies. Violent and corrupt forces relentlessly drag back a region rich in culture and potential.
The World Bank’s latest Latin America and Caribbean Economic Review (LACER) delivers a sobering reminder: organized crime is one of the region’s greatest barriers to economic development, and the consequences are becoming impossible to ignore.
According to the report, Latin America and the Caribbean are projected to post the world’s slowest economic growth through 2026, just 2.1% in 2025 and 2.4% in 2026.
Central American countries, many already struggling with poverty and dwindling foreign aid, face an even bleaker path due to the rising influence of criminal organizations.
Criminal groups no longer operate solely underground; they now act as de facto governments in many areas, taxing basic services, extorting businesses, monopolizing markets, and corrupting public institutions.
SEE ALSO: Central America Sees Spike in Cocaine Seizures in 2024 as Traffickers Shift Drug Routes
The financial toll is staggering. The Inter-American Development Bank estimates that crime costs the region 3.5% of its GDP—equivalent to $76 billion in Brazil and nearly $63 billion in Mexico in 2023 alone.
And the local impact is just as devastating: the International Monetary Fund found that a 10% rise in homicides results in a 4% decline in municipal economic activity.
This data underscores a troubling dynamic—violence doesn’t just harm individuals; it erodes confidence, deters investment, and disrupts entire economies.
SEE ALSO: Central America Homicide Rate: El Salvador Had the Lowest and Honduras the Highest Murder Rate
More alarming is the excessive level of violence tied to organized crime in the region. While crime victimization is three times higher than the global average, homicide rates are up to eight times higher.
The World Bank report reveals that much of this violence exceeds what would normally be expected based on poverty levels, raising the question: Why is Central America so uniquely affected by lethal organized crime?
The answer lies in a destructive feedback loop. Persistent poverty creates fertile ground for criminal groups to recruit members, exert control, and entrench themselves in power.
Meanwhile, their presence deters economic development, deepens inequality, and further undermines the state, making it easier for them to thrive.
This cycle became particularly evident during the COVID-19 pandemic, when economic collapse enabled drug trafficking groups and gang governance to expand.
The report draws a stark comparison using Haiti and Venezuela as extreme cases. In Haiti, gangs now control 85% of Port-au-Prince amid a total breakdown of governance and international support.
In Venezuela, criminal organizations have fused with state power, creating a hybrid regime where paramilitary groups and guerrilla organizations manage illicit economies and crush dissent.
Ultimately, the World Bank warns that if countries don’t make significant reforms and strengthen their institutions, organized crime will keep holding back growth, widening inequality, and blocking Central America from moving forward.
SEE ALSO: Central America Primed for Coca Expansion, Study Finds
Combating this threat requires more than just policing—it demands long-term investment in governance, social resilience, and economic opportunity.
In Central America, crime is no longer just a symptom of underdevelopment—it is a core driver of it. And until that changes, the region’s promise will remain perilously out of reach.
