Apr 4, 2025
Healthy growth for Latin America: Tapping the region’s healthcare sector for economic gains
Introduction
Latin America’s healthcare sector is navigating a period of significant transformation. Demand for healthcare services is increasing, while persistent challenges in infrastructure, funding and access hinder the region’s ability to meet this demand effectively. However, these intersecting trends also present an opportunity. With investments and policy reforms, Latin America can address these challenges, fostering economic growth and improved quality of life for its citizens.
Current landscape and challenges in healthcare
Healthcare infrastructure, accessibility and disparities
Over the last few decades, healthcare access and affordability in Latin America have improved significantly. Life expectancy at birth has risen from 71 to 74 years, although this increase falls short of the OECD average.1 Similarly, out-of-pocket healthcare expenses have dropped from over 40% to approximately 28%,2 underscoring enhanced affordability (Fig 1).
Out-of-pocket expenditure as a % of current health expenditure in Latin America & Caribbean
Source: World Development Indicators. Data as of December 16th 2024.
However, these positive developments mask underlying disparities in access to and quality of care. The region’s healthcare infrastructure remains insufficient. The average number of physicians (two per 1,000 people) and nurses (3.6 per 1,000) are well below the OECD standards of 3.5 and 10.3, respectively (Fig 2).3 Only Argentina and Uruguay surpass these benchmarks. Across Colombia, Peru, Mexico and Uruguay, only a third of adults report having access to high-quality care.4
Medical doctors per 1,000 people
Source: WHO. Data as of January 25th 2025.
Income inequality exacerbates these challenges. In Colombia, for instance, 32% of the poorest citizens reported barriers to healthcare access before the pandemic, compared with just 19% of the wealthiest.5 Excluding Argentina, Costa Rica, Mexico and Uruguay, private healthcare expenditure has been increasing across the region.6 Currently, government and compulsory health insurance spending in Latin America averages just 57% of total health expenditure, significantly below the OECD average of 74%.7 This reflects the higher rate of out-of-pocket spending in the region, which contributes to a two-tiered system.
Inequities are also evident in urban-rural divides: in 2020, 21% of rural households in Latin America reported an inability to access healthcare, compared with 16% of urban households.8 This gap underscores the critical need for more equitable distribution of healthcare resources.
Aging population and healthcare demand
Latin America’s population is aging rapidly (Fig 3). By 2050, the elderly population will more than double, with those aged 60 and older accounting for over 25% of the region’s total population.9 This demographic shift will significantly alter the region’s workforce and increase demand for healthcare services, particularly in long-term and geriatric care, chronic disease management, and palliative care.
Median age of population, Latin America and the Caribbean
Source: UN Population Division. Published 2024.
Non-communicable diseases (NCDs)—such as cardiovascular diseases, diabetes and cancer—are already the leading cause of mortality in the region, responsible for 77% of deaths.10 Aging is directly linked to the prevalence of NCDs, and it has counteracted the progress made through successful public health efforts to reduce NCD incidence.11 Specialized geriatric care will be required to support the aging population’s needs, particularly for preventing, treating and managing NCDs, as the population continues to age throughout Latin America in the coming years. Yet, its availability remains limited.12 Efforts to upskill healthcare workers in geriatrics could help address this shortfall while creating much-needed employment opportunities in the sector.
Healthcare as a driver for economic growth
The economic case for better healthcare systems
Improved healthcare systems not only save lives but also drive economic prosperity. Econometric research suggests that an additional average year of life expectancy is associated with a 2.4% increase in economic growth for a country.13 For lower-income countries, this boost is even more pronounced, as healthier populations contribute to demographic transitions and long-term growth. For wealthier nations, the connection lies in enhanced productivity—healthier workers are more productive, and older adults who maintain better health can continue to participate in the economy longer, supporting consumer spending and reducing dependency costs.
The aging population as a challenge and opportunity
Despite the headwinds associated with aging, particularly when it comes to the workforce, this population also represents a powerful economic force. Globally, the 50+ demographic is projected to account for US$118trn—or 39%—of global GDP by 2050.14 In Latin America, this group’s contributions will be substantial: by 2050, older adults will generate 48% of Brazil’s GDP, 47% of Argentina and Chile’s GDP, and 35% of Mexico’s GDP.
To harness this potential, targeted investments in elderly care infrastructure through facilities, training and technology are essential. Supporting older adults’ active participation in the economy could mitigate the high costs associated with preventable diseases while promoting a healthy lifespan extension. This, in turn, promotes consumer spending among the aging population.
Healthcare and biotech’s growth potential
Latin America’s healthcare and biotech sectors hold untapped economic potential. The biopharma market, currently valued at US$32.4bn, is projected to reach US$51.4bn by 2029.15 Despite this growth, the pharmaceuticals sector contributes no more than 1% of GDP in any of the countries in Latin America.16 The region accounts for just 4% of global pharmaceutical revenue, far below its 8.3% share of the global population.17
The region’s fragmented pharmaceutical production highlights expansion opportunities. While countries like Mexico and Uruguay produce over 40% of their domestic pharmaceutical needs, others like Chile and Peru meet just 15% and 12%, respectively.18 Enhancing local production capabilities could reduce reliance on imports and foster economic resilience.
Biotech start-ups are also gaining traction, leveraging the region’s rich biodiversity and talent for research and development and advancing technologies like artificial intelligence-driven diagnostics. By 2030, Latin America’s biotech sector is expected to surpass US$210m—a small but rapidly growing proportion of the overall biopharma sector.19
Health innovation and technology are burgeoning fields as well. Over the past decade, more than 1,200 health tech companies have emerged in Latin America, with Brazil leading the charge and funding peaking at over US$650m in 2022 (Fig 4).20, 21 However, the notable decrease in 2023, particularly in the health space, was driven by a correction in overall venture capital funding amid global high valuations and rate hikes. Telemedicine, catalysed by the covid-19 pandemic, is particularly promising. During this period, telehealth and digital health solutions gained rapid, wide acceptance across the region. For example, in Uruguay, 86% of early covid-19 cases were managed remotely, facilitated by supportive legislation (Fig 5).22 Consumer demand for telehealth is robust—48% and 41% of individuals in Latin America say they prefer virtual or at-home care for follow-up and low-complexity situations, respectively.23
Healthtech funding, Latin America and the Caribbean, US$ m
Source: IDB; HolonIQ, Published December 1st 2023.
Proportion of early covid-19 cases in Uruguay treated using telemedicine
Source: PAHO. Data accessed on November 18th 2024.
This demand extends beyond telehealth to a range of digital health solutions—81% of people in the region express willingness to pay for wellness apps, including 88% of Mexicans. One example of a firm taking advantage of this new environment in the region is Nilo Saúde in Brazil.24 The company offers care coordination and patient health solutions for health services networks and raised US$10m in series A funding from a team of investors in 2022.25
Economic and policy considerations for promoting health and longevity
There are structural changes that would help promote improved health and longevity across the region while fostering a strong entrepreneurial environment in Latin America:
Increasing healthcare investments
Reaping the rewards of good health will require investments into healthcare systems. The Pan American Health Organization recommends that countries allocate at least 6% of GDP to healthcare, but only a few, including Cuba and Uruguay, meet this target.26 Increased investment is critical to expanding access and addressing future challenges, but this target will be particularly difficult to achieve given the fiscal headwinds and high debt levels in many Latin American countries.27
Enhancing health information systems
Effective healthcare systems require robust data infrastructure. Improved health information systems would enable policymakers and practitioners to assess care quality and outcomes more effectively, driving continuous improvement.28
Promoting digital health solutions
The adoption of digital health tools, such as telemedicine, represents a transformative opportunity. These technologies can bridge gaps in healthcare access, particularly in underserved rural areas, while fostering growth in the region’s health tech sector.29
Addressing social determinants of health
Health disparities are often rooted in broader social inequities. Targeting the social determinants of health—such as income inequality, education and housing—could significantly reduce these disparities.30 Policymakers should prioritise initiatives that address these underlying factors to promote a more equitable healthcare system.
Seizing the healthcare opportunity
Latin America’s healthcare sector stands at a pivotal moment. While progress in access and affordability has been significant, the region must address persistent disparities and prepare for growing healthcare demands. By investing in healthcare infrastructure, workforce development and technological innovation, Latin America can build a resilient system capable of meeting these challenges.
Moreover, the healthcare sector offers a dual opportunity: improved public health and substantial economic growth. Advancing health innovation and addressing the social determinants of health will not only enhance the quality of life across the region but also lay the foundation for long-term prosperity.
Latin America’s path forward is clear. By seizing this moment, the region can transform its healthcare challenges into a cornerstone of sustainable development and economic opportunity.
1 https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations=ZJ; https://www.oecd.org/en/publications/health-at-a-glance-latin-america-and-the-caribbean-2023_532b0e2d-en.html
2 https://data.worldbank.org/indicator/SH.XPD.OOPC.CH.ZS?locations=ZJ
3 https://www.oecd.org/en/publications/2023/04/health-at-a-glance-latin-america-and-the-caribbean-2023_7ba284d7.html
4 https://www.thelancet.com/journals/langlo/article/PIIS2214-109X(23)00488-6/fulltext
5 https://www.scielosp.org/article/rpsp/2020.v44/e11/#
6 https://www.lse.ac.uk/business/consulting/assets/documents/latin-america-healthcare-system-overview-report-english.pdf
7 https://www.oecd.org/en/publications/health-at-a-glance-latin-america-and-the-caribbean-2023_532b0e2d-en.html
8 https://www.oecd.org/en/publications/2023/04/health-at-a-glance-latin-america-and-the-caribbean-2023_7ba284d7.html
9 https://www.oecd.org/en/publications/health-at-a-glance-latin-america-and-the-caribbean-2023_532b0e2d-en.html
10 https://www.oecd.org/en/publications/2023/04/health-at-a-glance-latin-america-and-the-caribbean-2023_7ba284d7.html
11 https://www.sciencedirect.com/science/article/pii/S2667193X23000571
12 https://pmc.ncbi.nlm.nih.gov/articles/PMC9384165/
13 https://link.springer.com/article/10.1007/s00181-022-02226-4
14 https://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2022/global-longevity-economy-report.doi.10.26419-2Fint.00052.001.pdf
15 https://www.marketdataforecast.com/market-reports/latin-america-bio-pharmaceuticals-market
16 https://openknowledge.worldbank.org/server/api/core/bitstreams/353c099b-8aae-58f5-8a6d-c07eef593556/content
17 https://publications.iadb.org/en/publications/english/viewer/Health-Innovation--Technology-in-Latin-America--the-Caribbean.pdf
18 https://publications.iadb.org/en/publications/english/viewer/Health-Innovation--Technology-in-Latin-America--the-Caribbean.pdf
19 https://www.grandviewresearch.com/horizon/outlook/biotechnology-market/latin-america
20 https://publications.iadb.org/en/publications/english/viewer/Health-Innovation--Technology-in-Latin-America--the-Caribbean.pdf
21 https://news.crunchbase.com/venture/latin-america-startup-funding-eoy-2024/
22 https://www.paho.org/es/historias/telemedicina-uruguay-estrategia-que-lleg
23 https://www.mckinsey.com/industries/healthcare/our-insights/healthcare-in-latin-america-what-are-consumers-looking-for
24 https://www.nilosaude.com.br/
25 https://latamlist.com/brazilian-healthtech-nilo-saude-raises-10m-in-a-series-a-latamlist/
26 https://www.thedialogue.org/analysis/latin-americas-lagging-economies-and-setting-priorities-for-health-investment/
27 https://americasquarterly.org/article/latin-americas-renewed-fiscal-challenges/
28 https://www.oecd.org/en/publications/health-at-a-glance-latin-america-and-the-caribbean-2023_532b0e2d-en.html
29 https://publications.iadb.org/en/publications/english/viewer/Health-Innovation--Technology-in-Latin-America--the-Caribbean.pdf
30 https://oxfordre.com/economics/display/10.1093/acrefore/9780190625979.001.0001/acrefore-9780190625979-e-246
KEY RISKS
Important Information
Latin America can transform its healthcare challenges into a cornerstone of sustainable development and economic opportunity.
Economist Impact
This article was written by Economist Impact, with support from J.P. Morgan
Published Apr 25, 2025
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