After seven months of reporting drops in production levels, which were caused by the crisis generated by the covid-19 outbreak, during October the Monthly Index of Economic Activity registered a 1.3% year-on-year variation.
The health emergency led to a severe economic crisis, which began to become evident in March, when the Monthly Index of Economic Activity (IMAE) fell 5% year-on-year.
After the IMAE reported year-on-year variations of -9% and -8%, respectively, in July and August, during September the Costa Rican economy continued to recover from the impact of the health crisis by reporting a 6% drop in production.
The Central Bank of Costa Rica (BCCR) reported that the economy is in the process of recovery, as a result of the process of reopening and gradual lifting of sanitary restrictions, which were imposed following the outbreak of covid-19. However, the upturn so far is not enough to fully recover the loss in production of the previous quarter, so the level of activity is still lower than in the last quarter of 2019.
After dropping in May 2020 due to the outbreak of covid-19, then registering a -11% year-on-year variation, since then the economic activity index has been recovering quickly, reporting a reduction of only 0.3% in September.
The 0.3% decline in the Monthly Index of Economic Activity (IMAE) was influenced by the drop recorded in Accommodation and food service activities, Construction, Trade and vehicle repair, Transportation and storage, as well as by the growth observed in Manufacturing industries; Supply of electricity, water and sanitation services, and, Agriculture, livestock, forestry and fishing.
In the critical context of this year, the resilience of remittances and exports, added to the decline in oil prices, would have somewhat shielded the Guatemalan economy, whose GDP would fall only 2% by the end of 2020.
The programs in response to Covid-19 (Bono Familia, Fondo de Protección al Empleo, Fondo de Crédito para Capital de Trabajo), along with the temporary restructuring of loans by the banking system, are helping to sustain household income and business liquidity, the multilateral agency reported after making its last visit.
According to the Central Bank, this year the Costa Rican economy will contract by 4.5%, an estimate that would be optimistic in the current context of fiscal and economic crisis, uncertainty, distrust and lack of decisions in the transcendental issues facing the country.
The recent results of local production and the new estimates of global economic activity have allowed the Central Bank of Costa Rica (BCCR) to revise its economic growth projections for the country: the economic contraction for 2020 is expected to moderate to 4.5%, from the 5.0% predicted in the 2020-2021 Macroeconomic Program Review of last July. For 2021, an annual increase in production of 2.6% is projected, a figure 0.3 percentage points (p.p.) higher than that also announced in July.
As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.
Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19. The strict quarantines decreed, the closure of borders and commercial establishments, ended up damaging the dynamism of productive activities.
After the IMAE in Honduras registered a -22% year-on-year variation in May of this year, during July and August the contraction of Honduran production was less, reporting falls of 13% and 8%, respectively.
The measures adopted to face the Covid-19 health emergency have had a negative impact on economic activity, reflected in the accumulated variation to August 2020 of the Monthly Index of Economic Activity (IMAE), which shows a 10% contraction in its original series, reported the Central Bank of Honduras (BCH).
During July the IMAE registered -4% year-on-year variation, a drop that is less than those reported in April, May and June, months in which due to the crisis generated by the covid-19, production reported contractions of 10%, 8% and 6%, in that order.
In the seventh month of the year, agricultural activity grew by 9.7% (2.1% in the accumulated January-July), due to increased work and production in the cultivation of coffee, corn, beans, rice, sorghum, and peanuts, among other agricultural products, reported the Central Bank of Nicaragua (BCN).
Agriculture, Financial and Insurance Activities, and Real Estate Activities, are the sectors that in Guatemala and in the context of the economic reopening, have increased their growth forecasts for 2020.
In June, when mobility restrictions were severe in the country due to the outbreak of covid-19, the Bank of Guatemala (Banguat) predicted that by the end of the year, Agriculture would grow by 1.1%, Financial and insurance activities by 2% and Real estate activities by 2.8%.
In the context of the crisis generated by the outbreak of covid-19 and after reporting a -9% year-on-year variation in July, in August the IMAE registered a smaller reduction by contracting 8% compared to the same month in 2019.
The fall in the volume of production is greater in the activities of hotels and restaurants (59.3%), transport and storage (27.4%) and trade (15.5%), all of which is closely related to the greater incidence in these sectors of national and international restrictions on the movement of people and goods, reported the Central Bank of Costa Rica (BCCR).
After reporting in June a 7% year-on-year variation, in July the monthly index of economic activity continued to fall, registering an 8% drop with respect to the same month in 2019, a decrease that is explained by the economic crisis affecting the country.
The lower activity, which is due to the impact that the pandemic has had in Costa Rica and around the world, is seen in the five major economic activities (agriculture, manufacturing, construction, trade and services) that make up the monthly index of economic activity (IMAE).
After the IMAE in Guatemala registered a -11% year-on-year variation in May of this year, during June and July the production contractions were lower, reporting falls of 7% and 5%, in that order.
The Bank of Guatemala reported that in the current economic crisis that emerged due to the spread of covid-19, the activities that have most boosted the drop in production are trade, tourism and transportation.
Variations indicating a certain improvement in the world economy, the reopening of different markets and the recovery of exports are some of the factors that could influence Guatemala's economic activity to decrease less than expected in 2020.
After the industrial activity registered in May one of the lowest levels of the last years, it is expected that the sector will close 2020 in negative variations, but more moderate than those reported in the first half of the year.
The Index of Economic Activity of the Chamber of Industry of Guatemala, which is calculated by Central American Business Intelligence (Cabi), states that during May and in the context of the economic crisis resulting from the outbreak of covid-19, fell by about 10% when compared to the same period in 2019.
Speeding up the repayment of the tax credit, repealing the Solidarity Tax, approving the Leasing Law, reforming the Banking Law and the Free Zone Law, is part of what Guatemalan businessmen are proposing to reactivate the economy in this context of crisis.
At present, Guatemala is immersed in a severe economic crisis, which was generated by the restrictions to productive activities that were decreed due to the outbreak of covid-19.