Latin America needs urgent infrastructure spend to capture 5.6% AI GDP boost
The Inter-American Development Bank (IDB) reports that Latin America needs significant investment in data centers, cloud, and edge infrastructure to leverage AI's potential 5.6% GDP increase by 2030. Without urgent expansion of processing and storage capabilities, the region risks falling behind in AI development. The report calls for investment across critical infrastructure layers including data and model development, storage, processing, transport, and AI development frameworks.
Key Takeaways
- AI is projected to contribute 5.6% to Latin America's GDP by 2030, with 55% of gains coming from labor productivity.
- Data center electricity consumption is expected to exceed 1,000TWh by 2026, a volume comparable to Japan’s total annual usage.
- Global data generation is on track to reach up to 181 zettabytes by 2025, while IoT devices alone will contribute 73.1 zettabytes.
- The IDB recommends regional data hubs and public-private partnerships to bridge funding gaps and maintain technological sovereignty.
Why It Matters
Latin America’s limited local compute capacity forces regional firms to rely on North American or European servers, incurring high latency and costs that hinder real-time AI video applications. For the streaming industry, failing to build domestic edge and high-performance computing (HPC) resources will stall the deployment of localized recommendation engines and low-latency interactive features. To remain competitive, operators must monitor the rollout of regional data centers and high-speed fiber networks across key markets like Brazil, Mexico, and Chile. Watch for the implementation of national 'technology sovereignty' frameworks which may dictate where and how streaming data is processed locally.
Additional Context
The IDB's warning comes as hyperscale investment in the region accelerates. Per Americas Quarterly (June 2026), Google is currently constructing an $850 million data center in Uruguay, while Amazon has committed $5 billion to a new cloud region in Mexico. Microsoft followed suit in February 2026, announcing two new operational AI data centers in São Paulo as part of a $2.7 billion investment plan for Brazil through 2027. Despite this influx of capital, energy bottlenecks remain a primary concern. The Mexican Data Center Association recently noted that some projects are being redirected to Chile and Brazil because local grid planning in Mexico has failed to keep pace with the 140% surge in installed capacity seen between 2024 and 2025.
Market competition is also intensifying among colocation providers targeting AI workloads. Per Morningstar (June 2026), Vertical Data and Ascenty—the region's largest data center platform—formed a partnership this month to deploy specialized AI hardware across Brazil, Chile, Mexico, and Colombia. This infrastructure is specifically designed for high-density requirements like liquid-cooled GPU clusters. Regional investment in the sector is expected to double from $5 billion in 2023 to nearly $10 billion by 2029, according to White & Case reporting from November 2024. This build-out is critical for the region to narrow the gap with Northern Virginia, which currently holds more than triple the installed capacity of the entire Latin American market.
Read full article at bnamericas.com
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