SANTIAGO, Chile – Economic growth in Latin America and the Caribbean will slow to an average 4.7 percent in 2008 as central banks boost interest rates to combat rising inflation, the U.N.'s Economic Commission for Latin America said Wednesday.

Budget surpluses, shrinking debt and increased foreign currency reserves have positioned the region to better confront global shocks than it has in the past, said Alicia Barcena, executive secretary of the commission, known as CEPAL.

The gains, though less than last year's 5.7 percent growth, mark Latin America's sixth-straight year of greater-than 3 percent expansion – a growth streak not seen for 40 years in the region, CEPAL said in a news release. The Santiago-based group predicts unemployment will fall to an average 7.5 percent this year.

Still, inflation could average as much as 10 percent, led by rising food prices, which may push 15 million more people into poverty – leaving 190 million people in poverty, or 35 percent of the region's population, CEPAL said.

Widespread interest rate hikes could also boost local currencies, making exports less competitive and further slowing regional growth to 4 percent next year amid continued volatility in world financial markets, CEPAL warned.

The cooling U.S. economy will hit Mexico and Central America hardest. They send the bulk of their exports to the U.S. and depend on money sent home by millions of migrant workers affected by the slowdown there.

Mexico's economy was expected to grow by 2.5 percent in 2008, while Brazil's was due to expand by 4.8 percent, Barcena said. CEPAL meanwhile forecast 8.3 percent growth for Peru this year, the strongest in the region, followed by an 8 percent expansion in Panama.