The International Monetary Fund (IMF) Monday said growth in Latin America and the Caribbean is expected to rebound to 3.5 percent in 2013 after a 3 percent growth in 2012.

In its Regional Economic outlook for Western Hemisphere released in the Uruguayan capital, the IMF said the region's economic growth is being boosted by a stronger external demand, more favorable financing conditions and the effects of more flexible economic policies implemented in some regional countries.

The external risks to the near-term outlook for the region have diminished as the United States and the eurozone have taken policy steps to remove the immediate threats to global growth, the report said.

Looking ahead, the international organization projected a 4-percent growth for the region in 2014 as the combination of favorable external conditions should support the momentum.

But the IMF does not rule out threats to the region's economy, warning lower growth in the U.S. could harm Latin countries, particularly Mexico and Central America.

The report said a key risk is a reversal of favorable tailwinds of easy financing conditions and strong commodity prices that have prevailed since 2010.

"Conditions are still very favorable, but they will not last forever," said Alejandro Werner, director of the IMF's Western Hemisphere Department.

"The challenge for many countries in the region is to take advantage of this environment to rebuild buffers and build the foundation for stronger and more inclusive growth," added Werner.

The report advises countries in the region to make progress towards structural reforms to increase their productivity and growth potential.

Latin America's financially integrated economies are projected to grow around 4.5 percent in 2013, but it is important for these economies to implement "a more prudent fiscal stance to ease the pressure on capacity and slow the growth of current account deficits," according to the report.

The region's raw material exporters, meanwhile, will see a 4.6 percent growth, compared to 3.3 percent in 2012, while the region's large energy exporting countries, including Bolivia, Ecuador and Venezuela, will see a  moderate growth, adds the report.