Contagious Effect in Central America

Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.

Tuesday, July 24, 2018

The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.

In a report on the outlook for the Latin American economy this year, the IMF said that "...In Central America and the Dominican Republic, the robust growth of the United States and the higher level of remittances linked to uncertainty about its future migration policies continue to support solid growth performance in 2018. In any case, the political uncertainty in Nicaragua and the temporary interruptions of the construction sector in Panama have weakened domestic demand, which has led to a slight downward correction of regional growth in 2018, which could be 4%."

The positive aspect of this analysis, according to the IMF report, is that the solid growth of the United States and the stability of remittances flows could help to partly counteract the impact of the Nicaraguan crisis, which could continue for several more months.

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