The Monthly Index of Economic Activity (IMAE in Spanish) for June closed 2.96% up year-on-year. After reaching a high of 6.09% in February growth has slowed. The slowdown is led by the manufacturing sector, for which year-on-year growth in June was 1.13% compared to 12.6% in January, blamed on free trade zone output. The construction sector still shows no signs of recovery.
Inflation between Limits Established by BCCR
Year-on-year inflation to July closed at 5.68%, within the range set by the Costa Rican Central Bank (BCCR) of 4% to 6%. Underlying year-on-year inflation is 3.2% after starting the year at 4.1%. Available data indicate a downward trend supported by moderate international growth and low oil prices.
Repercussions of Fiscal Deficit
Between January and May the BCCR reports that the government's cumulative expenditure exceeded revenue by 1.93% of GDP. While this deterioration in government finances may not have an impact on interest rates in 2010, once the economy picks up and private sector demand for credit recovers this could lead to pressures on resources pushing interest rates up and making economic growth difficult.
Fundesa, Guatemala’s Foundation for Development, issued its monthly report on the status of the economy.
According to the Consumer Price Index, prepared by the National Statistics Institute, cumulative inflation up to May 2010 stood at 2.70%, which means that the price level rose when compared to December 2009.
Inflation deceleration and Risks to economic recovery.
The quarterly report from the Executive Secretary of the Central American Monetary Council (SECMCA) focuses on the region's inflation and recovery prospects.
Inflation, measured by year-on-year change in consumer prices, slowed in the second quarter of 2010 to 4.9%, compared to 2.9% in June 2009. This level is within the target limits set by the region's central banks.
In October, the Monthly Economic Activity Index (IMAE), grew for the eight consecutive month, driven by a 0.31% monthly increase.
Year-on-year the index still reflects an economic contraction, but at a lower pace. When compared with the last year, IMAE dropped 0.1% in October, an improvement over February, when the variation was 4.8%.
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