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Development: The official statistics agency, the Ibge, announced the figure for June's inflation on 6 July.

Significance: Inflation in June “remained stable" in comparison to May, at 0.28%. The accumulated rate for the first half of this year, however, is well above that registered in the same period in 2006. Inflation reached 2.08% between January and June this year, while in the same period in 2006 it stood at 1.54%. Annual inflation was 3.69% in June, up from 3.2% in May.

Still, the June annual rate remains below the central bank's 4.5% inflation target for 2007. This kept the market largely optimist regarding the state of the Brazilian economy. Indeed, the Brazilian currency, the real, rose 0.6% to R$1.90 to the US dollar amid confidence that the central bank will cut interest rates further and thus boost growth and investment. Last month the central bank cut the base interest-rate to a record low of 12% annually.

The main inflation driver in the first half of 2007 was rising food prices. In Brazil these rose 3.93% between January and June, three times more than in the whole of last year. This is largely a reflection of an increase in the price of food worldwide. According to Eulina dos Santos, from the Ibge, “if it was not for the low dollar the [inflation] rate for food would have been much higher, despite a record harvest forecast of 135m tons this year".

BRAZIL: The agricultural sector grew 4.6% in the first half of the year, a rate three times higher than in the same period last year.

CHILE: The trade surplus stood at US$17.3bn in the period between January and July, 21% higher than in the same period last year.

ECUADOR: Unemployment in the three largest cities fell to 9.43% in July from 9.93% in June.

BRAZIL: The construction sector is forecast to expand 7.9% this year. The sector grew 6.3% between April and June on the first quarter of the year.  

ECUADOR: The central bank forecasts economic growth of 3.4% in 2007 and 4.2% next year. The bank also forecast oil production to rise from 184m barrels in 2007 to 190m barrels in 2008.

Development: Brazil's defence minister, Nelso Jobim, started a five-day tour of the Amazon on 13 October.

Significance: Jobim's tour is the official start to of a new "national defence strategy", in which the Amazon region, and its rainforest, is of foremost importance. Jobim is being accompanied by Dilma Rousseff, the chief of staff of Brazil's presidency. Rousseff's presence indicates the plan is a priority for President Lula da Silva. Jobim told journalists that the new plan should be ready for implementation next year.

Jobim will check military installations on Brazil's border with Colombia and Venezuela, indicating Brazil's concern with increasing illegal activity in the porous region, from drug gangs to guerrillas. Jobim has also lambasted environmentalists' recommendations, in particular the UN Intergovernmental Panel on Climate Change, which seemed to suggest that the Amazon rainforest should be subjected to international monitoring, through an agreement that guarantees forestry protection and conservation.

Jobim made it clear that the Amazon is Brazilian and it is for Brazil alone to decide how the region should be developed and protected. "We are going to look after the Amazon because it is our business, Brazilians know how to look after what belongs to them", Jobim said. He also told reporters that the government is carrying out an examination of the work of environmental NGOs operating in the Amazon in order to "make it clear which ones collaborate effectively with the state and those which are there to do other things".

This declaration reflects the concern of Brazil's military, which has for many years complained that some international NGOs are operating in the Amazon to "conspire against the development of Brazil". The UN has on several occasions questioned Brazil's military for obstructing the work of NGOs in the region. The military, however, maintains that some international NGOs are committing crimes against Brazil's sovereignty, including what the call "bio-piracy".

ECUADOR: The government made a US$61.2m interest payment on its foreign debt.

MEXICO: Industrial output in the first nine months was up by 1%, compared with the same period of 2006.

Development: Oswaldo Payá, a high-profile Cuban dissident, delivered a petition to congress asking for the release of all political prisoners currently being held in the island's jails.

Significance: Payá's petition was received by employees of the Asamblea Nacional del Poder Popular, as Cuba's congress is officially known. This, however, does not mean that the petition will be accepted. Indeed, according to congress employees they received the petition "with patience", and only because they were "complying with their role". However, this is a step forward from the developments of 2002, when Payá's attempt to present a similar petition was prevented.

According to Payá, there are "diverging opinions about the release of political prisoners and the circumstances in which they were arrested, but those who we are now requesting amnesty for are being kept behind bars only because they defend and promote human rights". Payá also delivered another petition, to allow the free movement of Cubans "living in and outside" the island, in order to promote dialogue. The first petition is backed by 25,000 signatures of ordinary Cubans.

So far, the Cuban authorities and, significantly, Cuba's President Fidel Castro have deemed dissidents "traitors" or "mercenaries in the service of Washington". Things, however, seemed to improve a little with the handing over of power to Fidel's younger brother, Raúl, in June last year. Yet, for many dissidents there has been no real change or improvement in the communist regime's disrespect for their rights.

Development: On 30 January opposition prefects warned that the government's decision to fund the new pension payments with the direct hydrocarbons tax (IDH), to be implemented from tomorrow, signalled an end to talks.

Significance: The failure of dialogue between the prefects - who oppose the measure as it means a cut in their resources - and the government will reflect badly on the prefects.

Since the start of talks between the two on 7 January, the government has repeatedly shown itself willing to compromise, first proposing US$117m in compensation for the prefects and subsequently entertaining the possibility of reducing the cuts to free up an extra US$50m for them. However, the prefects have refused to budge.

Their perceived intransigence over the IDH issue could also erode support for their position on autonomy. This is another contentious issue, already dealt a serious blow last week after the secretary general of the Organisation of American States (OAS), José Miguel Insulza, came out in support of President Evo Morales and his draft constitution.

Insulza said that the new constitutional text was in line with democratic principles, rebuffing prefects' protests that it represented an attack on democracy.

Development: On 4 March the UN's International Narcotics Control Board (INCB) called on Bolivia and Peru to make chewing coca-leaves a crime.

Significance: This move is a blow to President Evo Morales of Bolivia, who has been campaigning for the decriminalisation of coca which he argues is very different from cocaine.

The INCB reiterated that coca was a banned substance under the 1961 convention establishing what drugs were illegal. The 1961 convention was agreed by all members of the UN and called on governments to criminalise the use of banned substances by 1989.

Bolivia's interior minister, Alfredo Rada, criticised the INCB's move. Rada said that if the INCB tried to enforce the demand it would be striking against Bolivia's cultural inheritance.

Development: On 8 April a Peruvian court sentenced a former head of the intelligence service, Julio Salazar Monroe, to 35 years in prison for his role in the 'La Cantuta' massacre in 1992.

Significance: This is bad news for Alberto Fujimori, who was president of Peru from 1990 until 2000. First, because the trial proved the existence of the La Colina death squad; secondly, because it concluded that La Colina was linked to the intelligence services and acted "with the consent of top military chiefs"; and, thirdly, because Salazar's 35-year sentence sets a precedent for Fujimori's trial.

Fujimori is currently being tried for human rights abuses and stands accused of authorising the 'La Cantuta' and 'Barrios Altos' massacres. He denies accusations that La Colina was under his direct command and claims that the murders were carried out without his knowledge; this verdict severely undermines his case.

Jose Pelaez, the prosecutor in Fujimori's trial, said before the verdicts were issued: "If the men who carried out the acts are found guilty, undoubtedly, the man at the top of the command chain, the man behind it all, Fujimori, also will be condemned for the same acts."

If Fujimori is found guilty he will be the first elected Latin American president to be sent to prison and could face a sentence of up to 30 years. Significantly for Fujimori, the sentence imposed on Salazar was increased by the court from an expected 30 years to 35 years in recognition of the severity of his crimes. The court also sentenced three further members of the death squad to 15 years each.

Fujimori, who was recently castigated by the judge in his trial after falling asleep in court, was sentenced to six years in prison in December 2007 for ordering the illegal search of a house belonging to the wife of his former head of intelligence, Vladimir Montesinos.

Development: Senior diplomats said on 13 May that they had almost finished the drafting of the final communiqué for the V European Union Latin American summit which takes place in Lima on 16 May.

Significance: Both Latin America and the European Union (EU) want to trade more with each other. The EU, and Latin America's most competitive economies, believe that the way forward is bilateral, rather than regional, trade agreements. For both Latin American exporters and the EU, this approach will minimise the disruptive effect President Hugo Chávez of Venezuela can have on trade negotiations. It is not clear whether Chávez , who insulted Chancellor Angela Merkel of Germany on 11 May, will attend the Lima summit. Merkel will attend the summit.

Initially, at the beginning of the decade, the EU started off by saying that it wanted to negotiate regional agreements with blocs such as the Mercosur; Central America; and the Andean countries. This strategy has delivered little so the EU is likely to follow the precedent it has set with Chile and Mexico and has hinted at with Peru and Brazil, and switch to bilateral negotiations.

The EU's “strategic partnership" links with Brazil are a snub to the rest of the Mercosur. The Lima summit could see Brazil starting to choose between clinching a trade deal with the EU and remaining inside the Mercosur as it is currently constituted: the Mercosur treaty bans members from making bilateral trade deals.

The Andean group is also at odds with itself. Peru and Colombia, egged on by influential private sector export lobby groups, are more interested in easier EU access than Ecuador and Bolivia. In Central America, three rounds of talks have only highlighted the difficulty Central America has in adopting a common position on several key issues.

One consequence of more bilateral rather than regional deals will be that the World Trade Organization's Doha Round will remain stalled. A senior EU trade official said in a pre-summit briefing that if the EU and the Mercosur failed to make progress in their mini-summit on 17 May, the Doha round would degenerate into “every man for himself" as countries hurried to clinch bilateral rather than more complicated multilatera, deals. However, the same EU official also argued that if the EU and the Mercosur did come to an understanding this would put huge pressure on other countries, notably the US and India, to relaunch the Doha round.

Development: On 17 June a judge in Rio de Janeiro ordered the army to leave the central Rio favela of Morro da Providência following the death of three young men who were handed over to a rival gang by a group of soldiers.

Significance: The ruling brings to the fore the tensions between the government and local authorities over the role of the armed forces in urban security. Judge Regina Coeli Medeiros de Carvalho ruled that army troops should leave Providência, although military technical personnel involved in social projects will be allowed to remain.

The judge based her ruling on the fact that the constitution does not allow the use of the army as a police force. Only last week the defence minister, Nelson Jobim, said he intended to send to congress by the end of the year a proposed new legal statute officially sanctioning the use of the armed forces for 'urban conflicts', such as drug trafficking in the favelas. The proposal falls under the ministry's new National Defence Plan, due to be presented to Lula in September.

Seven soldiers, three sergeants and one officer were involved in the incident, which took place on 14 June. The officers caught three young men, allegedly took them to a local army barracks and later transported them in a military truck to a neighbouring favela, Morro da Mineira, which is controlled by a rival drugs gang. The bodies of the three young men (aged 17, 19 and 23) were found in the early hours of 15 June in a rubbish dump: they had all been tortured and mutilated before being shot in the face.

According to some press reports the soldiers 'sold' the three to the rival gang. According to their own leaked statements, they wanted to teach the three a lesson for disobeying army orders and, somewhat disingenuously, did not expect them to be killed.

Rio's civil police force has detained the 11 members of the military involved, three of whom have allegedly confessed to the crime. They face prosecution for kidnapping and may also face homicide charges. Rio's state governor, Sergio Cabral, has categorized the acts as criminal.

The case has shocked Brazil and forced the government into an uncomfortable position. While police officers have long been known to be corrupt and heavily involved with local drug-trafficking gangs, this is the first time the army has been exposed in this manner.

The army has been stationed in Providência since the end of 2007, ostensibly in order to provide security for various social investment and infrastructure projects run by the Cities Ministry. However, residents have not always welcomed the army and their presences has been criticised by local authorities, human-rights groups and opposition politicians. After the bodies were found, locals in Providência mounted several attacks on patrolling soldiers. The soldiers responded with tear gas.

President Lula da Silva said yesterday that the death of the young men was “abominable". He called for justice and said the state would have to compensate the families of the victims for their loss. However, the president stopped short of saying the army should be withdrawn from the favelas, saying that it would be pre-emptive to allow one “very serious error" to dictate any decision.

The army will receive formal notification from the Rio judiciary on 19 June. If it fails to comply, it will face a fine of R$10,000 per day. The government might appeal the ruling.

Development: On 19 July Venezuela's president, Hugo Chávez , announced that Honduras was interested in joining Venezuelan-led alliance Alternativa Bolivariana para las Américas (Alba).

Significance: Honduran President Manuel Zelaya has neither confirmed nor denied Chávez 's declarations made at a ceremony held in Nicaragua on 19 July to celebrate the 29th anniversary of the Sandinista revolution. Instead he said that “Honduras was already an “observer of Alba and had been for months".

Honduras is already a member of Petrocaribe, the scheme whereby Venezuela provides oil importers in the Caribbean and Central America with cheap oil. Honduras membership of Alba would be a coup for Chávez and strengthen Venezuela's influence in the region.

So far Nicaragua is the only Central American country to join the bloc, which is also made up of Bolivia, Cuba, Dominica and Venezuela. Alba was created as an alternative to the (now defunct) Free Trade Area of the Americas (FTAA), promoted by the US.

The US is unlikely to welcome the prospect of Honduras joining Alba. And   Honduras-US relations took a turn for the worse on 21 July when Zelaya railed against the US ambassador, Charles A Ford, for saying that he had felt “intimidated" during his stint in Honduras. Ford told local daily, “El Heraldo", that in his three years in Honduras he had become aware to a limited extent of “ways of intimidating people_to keep them quiet."

Zelaya responded that he could not understand how someone could believe that Honduras could “intimidate the US" and described the diplomat's comments as “barbarous". He added that diplomats should refrain from expressing opinions about domestic affairs and blamed the US for being the “main cause of drug-trafficking in Honduras and Latin America". Significantly, Zelaya spouted the Chávez line that the US is the ultimate cause of the drug violence in Latin America because the US provides the demand for drugs.