Annual Report 2005

A positive economic trend continued in Latin America during 2005 as the region grew 4.6% with moderate inflation of 6.9%. An export boom, attributed to a favorable external environment, accounts for the region’s surplus in the current account of the balance of payments. In turn, external capital flows (especially FDI) returned to the region, although to a lesser extent than during the 1990s. In spite of the rise in international interest rates, country risk levels in Latin America have continued decreasing. This is the result of sound economic fundamentals, a healthy external position, robust financial systems and disciplined macroeconomic management. In general, fiscal policies have been prudent, monetary policies have been independent and effective, and cautious banking regulation has improved banking balances in the financial sector.