AFTER a decade of shrinking income, low investment, and exploding poverty, Latin America may finally be emerging from its worst economic crisis ever. Although often overstated and oversimplified, the newly found optimism - if suitably tempered - is justified. This is good news for the United States too.The positive outlook does not yet reflect greatly improved performance; sustained economic growth has by no means returned to Latin America. After three years of falling per-capita output, the region's growth in 1991 will just barely outpace population increases. The upbeat forecasts instead mainly derive from the intense, often successful efforts most countries are making to get their economies in order. Recent reports of the UN Economic Commission on Latin America and the Caribbean and the Inter-American Development Bank, among others, stress the significance of measures governments are taking to balance budgets and cut inflation, curtail controls on prices and markets, privatize and deregulate economic production, and remove barriers to trade and foreign investment. These changes are expected to make Latin America's economies more productive and internationally competitive. Also encouraging is the prospect of stronger economic ties with the US - Latin America's main trading partner and largest source of investment capital. President Bush's Enterprise for the Americas Initiative with its call for Western Hemisphere free trade offers little immediate assistance - but potentially it is a promising start toward more constructive economic relations in the hemisphere. Some key numbers are improving in Latin America. In contrast to the past three years, most countries now anticipate positive, if modest, per capita growth in 1991. Inflation has moderated in the past year; capital is returning to the region; and foreign investment is once again picking up. All this, however, has to be interpreted carefully. Foreign investors, for instance, are still wary. They are targeting only a few countries. Similarly, the sharp drop in inflation regionwide reflects the success of a few countries in battling hyperinflation; consumer prices are still rising at disturbing rates in many places. Some governments are effectively managing their external debts, but foreign debt obligations still block progress in many countries. Particularly worrisome is the sharp rise this y ear in imports to the region while export earnings stayed put. Most disheartening has been the dismal economic performance of Brazil - Latin America's largest country. Inflation is out of control; weakened national leadership and lack of political consensus are frustrating reforms; external debts are going unpaid. Given the size of its economy - nearly 40 percent of the region's total - Brazil's reverses have to weigh heavily in any assessment of Latin America's future. Latin America's best performers, Chile and Mexico, have shown that tough economic reform programs - stressing fiscal discipline, freer markets, and industrial restructuring - can create the conditions for recovery and sustained growth. Unhappily, they have also shown that it takes a long time for these reforms to produce results. Chile began in 1974 and Mexico in 1985, yet they still can only borrow money at junk bond rates. Moreover, wages in Mexico remain only about one-half of what they were in 1980, while wage levels and social programs in Chile have still not recovered from many years of deterioration. If most Latin American countries are now on the right track, they face a long and hard journey. Whether the 1990s produce Latin America's long-awaited economic revival depends mainly on the policies of each country. But the region's prospects will also be affected by the actions of the world's industrial powers. What Latin America most requires is not aid or special consideration, but rather that the US, Europe, and Japan take the medicine they are prescribing for others - ease trade barriers, reduce budget and trade deficits, and make the compromises needed to complete the Uruguay Round of trade n egotiations. The early signs of economic recovery are palpable in much of Latin America. Most economies of the region are being intelligently restructured to meet international standards. The rewards will be slow in coming and the speed of progress will vary. Yet, we are persuaded that the growing confidence in Latin America is warranted - and that the US can forge ahead toward new economic partnerships with the region.