High oil prices and tighter inflation controls have boosted the prospects for economic growth in Latin America, the International Monetary Fund (IMF) said.
Oil revenues are boosting growth throughout Latin America
The IMF's 2006 Regional Economic Outlook forecasts average growth in the region of 4.75% for 2006, a 0.5% increase over 2005.
Brazil and Mexico are leading an investment boom across the area, the IMF reported.
The IMF expects regional inflation to drop from 5.25% to 5% by 2007.
Strong domestic consumer demand is another factor that is driving growth, with private consumption expected to account for two-thirds of economic expansion in 2006 and 2007.
The IMF noted the success of central banks in keeping price increases under control and praised "the credibility of monetary frameworks in most of the region".
The report covered the entire region including the Caribbean, where higher oil prices have benefited Trinidad and Tobago as well as aiding the economies of Colombia, Ecuador, Mexico and Venezuela.
The IMF noted widespread reductions in poverty, with the income of the poorest half of the population growing twice as fast as that of the top 10%.
Employment is up, with jobless rates across the region falling towards an average of 10%.
The proposed $5.25bn expansion to the Panama Canal is expected to have a dramatic impact on the economy of the surrounding area, according to the IMF.
As the Panama Canal expansion project moves towards its 2014 target date for opening, increased demand for labour, goods and services will be seen throughout Central America, the IMF believes.