The country continues to experience significantly lower growth than its neighboring countries in a context of low investment, high emigration, low competitiveness and political paralysis, and with significant fiscal pressures.
From the IMF report:
Main policy issues
- Raising potential growth will require far-reaching structural reforms to foster competitiveness and investment, supported by measures to reduce crime and regulatory uncertainty.
The Central Bank has confirmed the widespread perception of economic slowdown, with growth forecast for this year falling from 3.4% to 2.8%.
The president of the organization confirmed that an excess of dollars in the foreign exchange market explains the behavior of the exchange rate, which has remained relatively low and stable in recent months.
Panama's improvement in the availability index of skilled labor, does not respond to an increase in supply, but to a drop in demand because of a slowdown in the economy.
An article on Panamaamerica.com.pa details the results obtained from the Talent Shortage Survey conducted by Manpower, noting that "... Panama has reduced its deficit of talent and skilled labor by 12 percentage points during the last year, going from 58% to 46%, however, the causes are not so encouraging, since the reduction is due to a decrease in the search for personnel by companies. "
The sum of growing state debt, increasing insecurity and lack of government actions aimed at recovering real production, is creating a perfect storm.
"... The Salvadoran Foundation for Economic and Social Development (FUSADES) said the country could be entering into a severe financial political and social crisis, if a stop is not put to the uncontrollable debt levels, and if the engines of economic growth keep being smothered. "
Increased borrowing costs, a disincentive to foreign investment and distrust of economic performance, are part of the expected scenario if public debt growth is not controlled.
Prensalibre.com reports that "... The draft budget for 2015 presented by the Ministry of Finance, amounting to $9.250 million (Q71 thousand 840.8 million), contemplates taking on new debt of about $2 billion (Q15 billion), of which $1.6 billion (Q12 thousand 334 million) came from bonds and loans. "
A Wall Street Journal article has pointed out the futility of the Northern Longitudinal Highway and a recession in the Salvadoran economy over the last 10 years.
"... The Northern Highway (which passes through some of the least populated areas of the most densely populated country in Central America) is an unfinished work, courtesy of the North American taxpayers," noted an article on Online.wsj.com.
Low economic growth, a poor fiscal situation, and high exposure to external shocks, are the conditions that could lead to a drop in the sovereign rating to speculative grade level.
Framed in a report entitled "The strong get stronger and the weak weaker," which analyzes the prospects of sovereign risk in the countries of Latin America and the Caribbean, the chapter on El Salvador indicates a high chance that the rating agency will lower the country's credit rating to B1.
There is an abundance of signs of deterioration of the Honduran state, where the fiscal crisis and the political crisis are feeding off each other.
Roberto Arce's article for AP, published in Laprensa.hn, reviews the events that mark the depth of the institutional crisis, with cessation of salary payments to civil servants and an external public debt which has once again reached $5 billion, after international multilateral banks waived $3.5 billion in 2007.
Key representative/s from the Guatemalan Exporters’ Association last 13-15 October attended the 8th TPO Network World Conference to exchange ideas and best practice around stimulating export-led economic growth and meeting the urgent challenges in the sector.
PRONicaragua, is the Nicaraguan Investment Promotion Agency, established in 2002. We are a non-profit, public-private institution whose mission is to generate economic growth and job creation in Nicaragua by attracting high-quality foreign direct investment. The Agency provides complimentary support services to qualified investors seeking investment opportunities in our country.
Operates in Nicaragua
Phone: (505) 2270 6400
Caribbean-Central American Action (CCAA) is a private, independent organization that promotes private sector-led economic development in the Caribbean Basin and throughout the Hemisphere.
Operates in Panama, Nicaragua, Honduras, Guatemala, El Salvador, Costa Rica and Caribbean Community
Phone: (202) 331-9467