MEXICO CITY - The recent massive inflow of US dollars into Latin America in large quantities will pose tough challenges to the region in 2011, president of the Inter-American Development Bank (IDB) Luis Alberto Moreno said on Tuesday in Washington.

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In an interview published on the IDB information network, Moreno said, "There is a tsunami of dollars looking for opportunities in countries that are showing growth. Undoubtedly, the flow ot capital will continue to arrive" in Latin America.

"We are living at a time when Latin America is experiencing encouraging development. We achieved stability. We have growing demand for basic products and a growing middle class. But challenges still exist in the macroeconomy," Moreno said.

Moreno said that Latin America's economy will grow between 4.5 and 5 percent in 2011, even though the development of some countries, mainly Argentina, Brazil, Chile and Peru, will depend on China's growth and consumption.

"China's economic growth may slow down, but what matters is China's consumption capacity, which takes up 25 percent of the world's luxury market," Moreno said.

Moreno said that the large inflow of US dollars has led to an appreciation of many Latin American currencies against the dollar, which was the main complaint presented by the Argentine, Brazilian and Mexican delegations during the G20 Summit last month in South Korea.

Moreno said that as exports have become more expensive and less competitive, the appreciation of Latin American currencies poses a threat to the industrialization process in countries where it is cheaper to import products than to produce them.

Another important challenge for Latin America in 2011 will be to keep public finances healthy, since the currencies' appreciation could affect the balance of payments, Moreno said.

He said that countries should focus on "consolidation" of their economies, with rigorous public accounts. Even though this might not be popular "it is always a good decision in the long run."

The integration in South America must go faster, said Moreno, warning that countries must take operational details into consideration.