Central America: Exports Increase, Income Goes Down

The region is expected to conclude 2018 with a rise of just over 4% in the volume exported and just 3.6% in value, due to the fall in international prices of several agricultural products.

Monday, November 5, 2018

According to the International Trade Outlook for Latin America and the Caribbean 2018, published by the Economic Commission for Latin America and the Caribbean (ECLAC), it is expected that this year Central America will export larger volumes at lower prices.

The report details that in Central America, the expansion of exports would be fully explained by the larger volume exported, since the sub region would experience a decline in the prices of its exported basket.

The document explains that this is due to the marked declines in the prices of cane sugar (-25%), coffee (-14%) and palm oil (-9%). This has particularly affected shipments from Honduras, Nicaragua and Guatemala, where these products represent large proportions of the total value exported (30%, 16% and 15%, respectively).

The Institutional Relations Director of the Guatemalan Exporters Association, Fanny D. Estrada, said to Elperiodico.com.gt that "... ECLAC's estimations are probable because last August the reduction in shipments was 2.4 percent. She emphasized that it is because of the impact of international prices on conventional products, although there are sectors such as clothing and textiles, fresh fruits and vegetables that have been more dynamic."

The report adds that in 2018, the maquila activity and free trade zones will mitigate the negative shock of the decline in prices of the agro-export sector. Between January and June 2018, exports from the maquila sector and free zones in Central America and the Dominican Republic increased by 5% in value compared with the same period in 2017 (a higher rate than the average of total exports of this group of countries).

See full report.

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A study by the Economic Commission for Latin America and the Caribbean (ECLAC) specifies that the costs paid by businessmen in Nicaragua, because of excessive procedures and low efficiency of foreign trade systems is 25.3% additional to the value of the goods, followed by El Salvador with 18.3%, Costa Rica with 16.3%, Honduras with 15.8%, Guatemala with 14% and Panama with 9%.

Economic Outlook for the New Year

January 2019

Excluding Nicaragua, the economies of Central American countries are projected to increase 2%, however, for the business sector some of the expectations may be too optimistic.

The 5.6% growth estimate for Panama is too optimistic for the private sector, as no major changes are expected compared to 2018.

Central America Towards 2019

December 2018

Higher domestic demand and increased investment are the factors that will influence the 3.3% growth forecast for the regional economy next year.

According to forecasts by the Economic Commission for Latin America and the Caribbean (ECLAC), in 2019 Panama will be the economy with the highest growth in Central America, with an expected rate of 5.6%.

Foreign Trade: What's Ahead for Central America?

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Because of a possible decline in the dynamism of the advanced economies, the volume of Central American exports is expected to increase by 0.4% in 2018 and by 2.6% in 2019.

According to a report by the Secretariat of Central American Economic Integration (Sieca), a possible decline in trade dynamism in advanced economies is expected by the end of 2018, which could generate consequences in international markets, with downward scenarios in 2019, between two and three percentage points with respect to 2018. This is mainly related to growing trade tensions and more complicated market access conditions than in previous years, involving important trading partners.

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