The region’s output is bottoming out as South America’s recession is being partially offset by a better situation in Mexico and Central America. The region’s recovery has been helped by higher than expected growth in Brazil in the first two quarters of 1999, while inflation remained subdued. Most observers expect inflation to be some 10% in 1999, the lowest level in 50 years.
Factors which may affect the region’s growth over the next year are external financing conditions, the extent of the expected slowdown in the US economy, and uncertainties about the pace of Brazil’s recovery. Moreover, a number of countries have fragile banking systems, which may affect economic growth in the medium term.