However, while the forecast is slightly higher than the bank's previous 4.8% growth forecast, the Washington D.C.-based institution foresees growth coming down slightly in 2008 due to the stabilization of commodity prices and the impact of the US economic slowdown.

Some countries that export commodities have benefited from recent high prices in these market, but others, such as Central American countries, have been hit hard, as they are net importers of foods and energy, the bank said.

"The good news is that there is good news in Latin America", said Pamela Cox, World Bank Vice President for Latin America and the Caribbean, during an end-of-year press briefing in Washington. She added that Latin America remains well prepared to face the mortgage loan crisis unleashed in the US.

"Latin America is in a far better position than it has been in the past. Countries are running good, external surpluses; we have seen a strengthening of budgeting policies and strengthening of financial sector policies in Latin America, which makes it much more resilient than in the past", she emphasized.

However, she explained that dangers still lurk for the region, particularly in countries that have strong trade ties with the US and that receive a large amount of remittances from expats working in America. She explained that some effects have been noticed already in the last quarter of this year, although only in Mexico and Central America, where remittances sent by immigrants in the US declined, especially from those who work in the construction industry.

"Overall, we are going into 2008 very positive about the developments in Latin America and very positive about the role of the World Bank in the region", Cox observed.

Referring to the announced creation of Bank of the South (Banco del Sur), Cox said that "a little competition is a good thing", and that "no country in the region needs to come to the World Bank for financial services only." When they do, she said, it is because "we facilitate development solutions, the help, and the assistance in working through the problems. Our role in the region is not just about money…it is also about the knowledge and the experience and the problem solving and implementation support we give."

To compete better globally against other regions like Asia or Eastern Europe, Cox said that the Caribbean and Latin America should invest in improving the quality of education, research and development and innovation, as well as reducing the cost of doing business in the region.

"China invests 3 percent of its gross domestic product in research and innovation, but Latin America invests only 1 percent as a region", she concluded.