Latin America Faces a Major Test in 2008

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Latin America continued to expand [its economy] strongly during the first six months of 2007, after a solid performance in 2006, the best in many years for several of those countries. Economic growth in the region in 2007 will average about 5%. The global economic conditions that began in the middle of this year -- caused by high-risk mortgage crisis in the U.S. -- have led to a downward revision of growth forecasts from the main global organizations as well as financial institutions.

Generally speaking, forecasts now call for a modest reduction in the growth rate of the overall region in 2008. Nevertheless, according to the most recent global forecast of the International Monetary Fund (IMF ), expansion will continue at a strong rate of about 4.25%. That would make 2008 the fifth consecutive year in which growth exceeds 4%.

The IMF report notes that economic growth has risen unexpectedly in those countries where growth was relatively modest in 2006. That's especially true in Brazil, where the GDP grew by 5.5% in the second quarter of 2007. In most of the other countries, expansion continued to be strong, in some cases reaching historic heights. ...