Highly favorable external conditions—interrupted only temporarily during the 2008–09 global financial crisis—coupled with prudent macroeconomic policies bolstered GDP growth in most of Latin America during the last decade. In contrast, growth in the Caribbean has been disappointing. On average, the Latin American and the Caribbean (LAC) region grew by 4 percent annually during 2003–12, compared with less than 2½ percent in 1980–2002 (Figure 2.1). But what were the (supply-side) drivers of this remarkable growth performance and will this momentum be sustainable moving forward?

New Challenges to Growth and Stability