Business Partners and Economic Recovery

After the unemployment rate in the United States fell from 15% to 8% between April and August, it became evident that at the beginning of the crisis the capacity of recovery that the North American country could develop was underestimated and it is expected that this behavior could boost the economic activity in Central America.

Monday, September 14, 2020

During the first half of 2020, when the first cases of covid-19 began to be reported in the region, forecasts noted that the recovery of economic activity would be excessively slow, due to a significant drop in consumption globally.
However, expectations have begun to vary and investment strategy specialists say that in the case of the U.S. economy, a market on which a large number of Central American products depend, it could accelerate its recovery.

Check out the "System for monitoring markets and economic situation in Central American countries", developed by CentralAmericaData.

Franco Uccelli, executive director and head of Client Investment Strategy for Latin America of J.P. Morgan, explains that "... initially it was expected that the economic recovery in countries like the United States would be U-shaped, after a contraction of 4.2% estimated for 2020, but 'now the evidence shows that perhaps we underestimated the capacity for recovery, and now there is talk that it will probably be V-shaped."

According to the forecast, by 2020 Latin America will contract its production by 8.2%, but for the specific case of Central America the projections are more encouraging, since it is estimated that economic activity will decrease by 4.4%.

Uccelli told that "... In the United States a few months ago unemployment was at 15% and now it is less than 8.5%. As labor market conditions continue to improve in that country and the unemployment level continues to fall, remittance flows to Guatemala, El Salvador and Honduras will be consolidated."

The remittances sent from the U.S. to the countries of the Northern Triangle of Central America greatly boost local consumption and activate several sectors of the economy.

The United States is one of the most important commercial partners for Central American companies. CentralAmericaData reports that in 2019 regional exports to the U.S. market exceeded $10.8 billion, an amount 5% higher than that recorded in 2018.

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