Latin American Economies Flourishing, According to U.N. Report : Economics: For fourth consecutive year, growth reaches 3% in the region and imports surge by 15%.

With steady economic growth and reduced inflation in 1994, Latin America enhanced its significance as a flourishing market for foreign goods and capital.

An annual report issued here this week by the U.N. Economic Commission for Latin America and the Caribbean said the region’s economies grew by an average of 3.7% in 1994, while its imports surged by 15%.

William R. Cline, a senior fellow at the Washington-based Institute for International Economics, said the report reinforces upbeat assessments of Latin America’s increasing economic importance.

“This should be a dynamic region in the next decade and beyond, so it’s an interesting region to ensure that the U.S. has the best possible terms of trade,” Cline said by telephone.

At the recent Summit of the Americas in Miami, President Clinton and 33 other leaders agreed to complete negotiations for a hemispheric free trade area by the year 2005.

This was the fourth consecutive year that Latin American economic growth reached 3% and the 1994 rate was the highest of the four. Total growth in the four years was 14%, more than in the previous 10 years.

The countries with the highest 1994 growth rates were Peru with 11%, Guyana with 8% and Argentina with 6%, according to preliminary estimates by the U.N. agency. It estimated growth of 3% for Mexico and 4.5% for Brazil, the region’s two biggest countries.

The economies of three countries contracted: Haiti by 11%, Venezuela by 4% and Honduras by 1.5%.

No 1994 figure was available for Cuba’s economy, which shrank by 10% in 1993.

Latin America’s 1994 inflation rate--excluding Brazil--was an estimated 16%, down from 19% in 1993 and 49% in 1991. And though Brazilian inflation exploded at 30% to 50% a month in the first half of 1994, it subsided to monthly rates of 2% to 3% after a new stabilization plan took effect in July.

Latin American exports grew by 14% in 1994, partly because world prices for major export commodities rose but also because the region’s exporters have learned to compete more efficiently on world markets, the report said.

“In the last eight to 10 years, Latin America has made a great effort to become more competitive internationally,” said Gert Rosenthal, executive secretary of the U.N. agency.

The region’s exports in 1994 were worth an estimated $152.8 billion, nearly double the 1986 value.

Imports grew to $171 billion this year from $59.7 billion in 1986.

About 60% of Latin America’s imports come from the United States; U.S. exports to the region grew by 63% between 1989 and 1993.

Rosenthal said an important part of Latin American imports were capital goods, a sign of increased investment to improve production capacity.

Foreign investment capital, loans and revenue from bond sales continued to flow into Latin America in 1994. The net increase in foreign capital of $57 billion was below the 1993 net of $65 billion--but 10 times more than in 1988.

Although the Latin American foreign debt increased in 1994 by almost 6% to $534 billion, due largely to bond sales, Rosenthal observed that export growth makes the debt level manageable for most countries.

Exports were the main motor of economic growth “in a context characterized by increasing price stability, a firm grip on economic policy, and abundant foreign capital,” the U.N. agency said.

Despite the growth, unemployment has increased in many countries. In rapidly growing Argentina, for example, urban unemployment has grown to 11.2% from 9.6% in 1993 and 5.6% in 1986. “It is evident that, in general, growth rates under 4% in Latin America and the Caribbean are not high enough to allow major inroads in the battle against poverty or to prevent unemployment and underemployment from remaining unacceptably high,” the U.N. report said.