Mexico City  - The economies of Latin America and the Caribbean are set to grow at best by 2.3 per cent in 2009, while unemployment rates will rise to above 8 per cent, according to a report that the United Nations made public Thursday.

"Economic growth in Latin America and the Caribbean is expected to slow markedly in 2009. The key drag is the fall in commodity prices. In addition, domestic credit is expected to tighten in many economies. Inflationary pressures, which surged during 2008 owing to the increasing costs of energy, transportation and food, should decelerate in 2009," the document says.

The document, under the title World Economic Situation and Prospects 2009, says Mexico and Central America are set to suffer most from the current slump, in light of their close ties to the US economy. The UN expects them to show a combined growth of 0.9 per cent, with relation to the 2.2 per cent growth of 2008.

"The subregion will be directly hit by the recession in the United States, which provides the market for most of its manufactured exports and jobs for its migrant workers."

The study estimates that South America's GDP, in turn, will grow by 2.9 per cent this year, in comparison to the 5.4-per-cent growth of 2008.

"Lower commodity prices will negatively affect the terms of trade. In addition, domestic demand will slow because of tighter financing conditions, as has already become evident in Brazil during the last quarter of 2008."

The rise in unemployment is set to revert the positive trend of recent years, when employment quality had improved and the unemployment rate had fallen to 7.5 per cent, the UN noted.

The document estimates global inflation of 7.3 per cent in 2009, compared to 8.1 per cent last year. (dpa)