Economic growth in Latin America is expected to hold strong in 2012 at a 3.6 percent average if Europe avoids a deep recession and China maintains steady growth, the Inter-American Development Bank said Sunday.

A report released for the 53rd meeting of the regional development bank said the main risks for the region would be a worsening of the European debt crisis and a deceleration in China.

"We are cautiously optimistic for Latin America and the Caribbean. The region has grown strongly in the last couple of years and it has shown it is resilient to shocks," said Santiago Levy, an IDB vice president.

"Most importantly, the region has developed a set of policy tools that have proven to be effective during economic downturns."

Though most forecasts do not anticipate a major crisis in Europe or a strong slowdown in China, "the world is quite uncertain right now -- it really is one of forking paths," said Andrew Powell, a coordinator of the report.

"Our report shows that resilience has increased for the region but certain vulnerabilities remain and may limit the scope for countercyclical policies if the crisis were to worsen in Europe."

The report said the region's dependency on commodities remains high and a surge in capital inflows has increased some vulnerabilities. The presence of a large number of European banks could make the region's banking sector vulnerable to a credit squeeze if the crisis in the eurozone worsens, it said.

If Europe's woes persist into 2013, that could deal a blow to major economies in the region such as Brazil and Mexico, it said.

But the report said most of the larger economies in the region have adopted flexible exchange rates to help weather a global crisis, and many have taken steps to slow currency appreciation, "which have all enhanced the region's resilience against another possible international financial crisis."

The International Monetary Fund said in its report last September that Latin America and the Caribbean would see 4.0 percent growth in 2012 thanks largely to commodity exports and despite slow global growth. But since then the outlook has worsened.