Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
His analysis indicates that, “according to the key indicators, there is evidence that the adverse trends that hit the world economy, and in particular Central American countries, are beginning to subside.” Though, of course, the pace varies by country.
Regarding the outlook for the rest of the year, Mendizábal comments: “Taking into account the recent macroeconomic change, which suggests that the effects of the crisis have begun to recede, little by little optimism is reappearing in regional growth forecasts.” According to the most recent predictions from the Central American Monetary Council (CMCA), which comprises the presidents of the region’s central banks, the economic recovery will yield regional growth of 2.5% by the close of 2010 and inflationary pressures will remain under control.
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.
Moderated reduction in IMAE, drop in international reserves, pressure on the exchange rate and a worsening fiscal situation.
Costa Rican Economy Still in Recession
An improvement in economic activity has been observed in the second trimester. From April to June, the Monthly Index of Economic Activity (IMAE), recorded an annualized growth rate of 5.9%, while it had contracted at an annualized pace of -0.9% in the first trimester.
Growing fiscal deficit could increase the Treasury's participation in the securities market.
Even though economic activity dropped at a lower pace, Costa Rica's economy is still in recession.
Moderation in the contraction rate of the Monthly Economic Activity Index (IMAE) - Economic activity in Costa Rica is still contracting when compared to last year's levels, even though the pace has reduced in the last months. In May, IMAE registered a drop of 3.61% when compared to May 2008, but the largest 12-month drop of this indicator was recorded in February, at 5.5%....
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