Latin American economies are expected to grow by around 4.6 percent in 2006, led by strong growth in Argentina, the Bank for International Settlements (BIS) said in its annual report published Monday in Chile.

The Switzerland-based bank predicted that the economy of Argentina was projected to grow 7.7 percent this year, Mexico's by 4 percent and Brazil's 3.5 percent.

It said that emerging economies were experiencing an unusually favorable moment in time, with high world demand and access to cheap external financing.

The bank said that all emerging economies have grown since 2002.

"Strong economic growth has been accompanied by large current account deficits, which have allowed them to reduce their external debt burden," the bank said.

But the bank questioned if authorities in the nations had taken full advantage of the situation to improve their fiscal position.

It warned that Latin America's growth rates are subject to risks, because they depend too heavily on exports, which means they could be hurt by any volatility in industrialized nations' growth rates.

The BIS also said that the Latin American countries are at risk from inflation, due to the volatility in raw material prices and the low, and sometimes negative, real short term interest rates.

Many countries face the challenge of "avoiding monetary policy errors that would put financial stability at risk," the report said.

Source: Xinhua