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Latin American And Caribbean Economies Grow 5.6% In 2007
Despite recent turbulence in the international community, Latin America and the Caribbean are better prepared to face a situation of external economic volatility, as the region will close 2007 with a growth of 5.6 percent on its gross domestic product (GDP).

Based on estimates issued by the Economic Commission for Latin America and the Caribbean (ECLAC), the region is placed in a much stronger position to face increased external volatility. During 2007, Latin America and the Caribbean sustained a favorable economic situation that allowed for growth in nearly all the countries of the region.

On the other hand the report presented on December 13 by ECLAC Executive Secretary Jose Luis Machinea, foresees a slight downturn for 2008 in the region. It says Latin America and the Caribbean could register a 4.9% growth rate next year.

According to ECLAC, many of the trends characterizing the region's current stage of economic growth stayed on course during 2007, including its current account surplus (albeit at a lower level), renewed improvements in terms of trade (also at a lower rate), decreased unemployment; increased international reserves and reduced external debt as a percentage of GDP. Meanwhile, dynamism in investment continued and private consumption grew considerably.

Current accounts registered a surplus of 0.7%, with terms of trade increasing by 2.6% overall, despite notable differences among countries, says the Preliminary Overview.

It emphasizes that the unemployment rate dropped to 8.0%, its lowest level since the early 1990s, in a context of relative improvements in the quality of employment, which, coupled with economic growth, has a positive impact on poverty indicators, the report reads.

Likewise, it stresses that the situation is not free of risks. In addition to the likely slowdown of the US economy, the region exhibits warning signs of its own, including persistent decreases in the real exchange rate, growing inflation in several countries, and an overall increase in public expenditure. In addition to these short-term risks, ECLAC cautions that the region is not doing enough to improve competitiveness at the systemic level, and cites the specific need to increase investment (especially infrastructure for energy and transport), encourage innovation and foster greater human resource capabilities, primarily by improving the quality of education.


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