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This document provides a review of the regions performance in 2012 and its outlook in 2013 as it recovers from the global economic crisis and assesses the regions policy response to remaining and emerging vulnerabilities. Areas of economic and social policy analysed include growth, inflation, trade and investment, financial markets, employment, migration and remittances. Key challenges ahead are addressed and policy responses recommended for countries in order to sustain their development. The document also addresses a thematic issue, discussing the current approach of macroeconomic policy making and critically assessing whether it has served development adequately.