Also contributing largely to the region's poor performance were Venezuela, where the economy shrank by a steep 7 percent, and Uruguay and Paraguay, both with a 3 percent fell.

Prospects for next year are more encouraging as a 2.1 percent global growth is expected in the region, ECLAC said. Latin America posted a 0.5 percent economic growth in 2001.

The Santiago-based agency's executive secretary, Jose Antonio Ocampo, said that although the year's results were negative in the region, the last quarter showed indications of a recovery in several countries, including Argentina.

Argentina's is expected to grow by 2 percent in 2003, ending a four year-long recession.

But, the former Colombian Finance Minister added, the continued recovery in Latin America will depend largely on an improvement in the international economic situation, especially in the United States.

Peru, Ecuador and the Dominican Republic posted the best economic results in 2002 with nearing 4 percent while growth averaged 2 percent in Honduras, Bolivia and Chile and 1.5 percent in Colombia, Brazil and Mexico.

Inflation, which had been curbed in the region in recent years, again jumped to a steep 12 percent in 2002, compared to 6 percent a year earlier.