After a robust recovery following theglobal crisis, Latin American and the Caribbean (LAC) hasentered into a phase of lower growth dynamics: economicactivity in the region is expected to expand by about 3percent in 2012, after having grown at 4 percent in 2011 and6 percent in 2010. This deceleration is not specific to LACbut is part of a global slowdown. World growth is indeeddeclining sharply, from 4.5 percent in 2011 to about 2.3percent in 2012. Notably, the slowdown in middle-incomeregions has taken place in a highly synchronized manner:growth rates in LAC, Eastern Europe and South East Asia havefallen by a very similar magnitude (about 3 percentagepoints) between 2010 and 2012. While this synchronizationreflects exogenous (global) forces the spillover to emergingmarkets of weaker activity in the world's growth poles,particularly Europe and China it also reflects endogenous(internal) dynamics, particularly the fact that many MiddleIncome Countries (MIC) had already reached in 2010-2011 thepeak of their own business cycles. This synchronicitynotwithstanding, the 2012 growth forecasts for individualcountries in LAC are significantly heterogeneous, reflectingcomplex interactions between external and country-specificfactors. The first chapter, which is shorter, concerns theeconomic juncture and growth prospects. The second chapter,which is longer and more substantive, deals with selectedlabor issues from both the structural and cyclical viewpoints.
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