Despite financial disruptions in the United States, macroeconomic performance in Latin America and the Caribbean was very positive in 2007. This was the fourth consecutive year of strong growth. Inflation held at moderate levels in nearly all the countries, and fiscal and external balances remained positive for the region as a whole. Against this backdrop of growth with stability, unemployment and poverty have continued to decline. The first Millennium Development Goal for 2015, to reduce extreme poverty by half of its 1990 levels, is within reach for most of the countries.

However, 2007 also saw a downturn in a number of important macroeconomic variables. In several countries the fiscal situation began to deteriorate because trends toward increased public spending considerably outpaced increases in revenues. Current account balances in most countries began to weaken or were already negative. The recent reduction in unemployment rates was very modest, suggesting structural limitations in the labor markets. And the rising costs of food and energy in several countries were starting to be reflected in higher inflation, at a time when currency appreciation trends had leveled off and the pool of unemployed workers was already small.

Under the circumstances, soundness of macroeconomic policies, effectiveness of social policies and responsiveness of political systems will be put to the test in 2008. Not only must growth and stability be preserved, but the growing expectations on the part of people in the region to achieve a better quality of life and more inclusive, equitable societies must be met.