Dark Economic Outlook

The World Bank projects that the Central American economy will contract by 3.6% this year, due to restrictions on movement, a decline in remittances and tourism, and a drop in agricultural prices.

Tuesday, June 9, 2020

The sudden and widespread impact of the coronavirus pandemic and the measures taken to contain it have caused a drastic contraction in the global economy, which, according to World Bank forecasts, will shrink by 5.2% this year, the bank reported on June 8.

The effects are being particularly severe in the countries most affected by the pandemic and those that depend heavily on international trade, tourism, commodity exports and external financing.

The report states that "... The risks facing the region's outlook are clearly unfavorable. A worsening of the outbreak would put pressure on health systems and be devastating for countries with limited health care capacity. Outbreaks of the virus in the region's large economies could have a spillover effect, and a second wave of the pandemic in advanced economies would have negative repercussions in the region."

See "Economic Growth: Outlook for the Region"

According to the projections published in June by the World Bank, the outlook is worse for some economies when compared to that predicted by the same organization in April, as El Salvador went from -4.3% to -5.4%. Nicaragua went from -4.3% to -6.3%, and Honduras from -2.3% to -5.8%.

In the case of Guatemala, the fall would almost double, since in April the forecast was that the economy would shrink by 1.8% in 2020 and in June the estimate changed to a decrease of 3%.

The forecasts for Costa Rica and Panama remained unchanged. See the comparative table of forecasts published by the World Bank.

Country
Outlook for 2020, published in April
Outlook for 2020, published in June
Costa Rica
-3,3%
-3,3%
El Salvador
-4,3%
-5,4%
Guatemala
-1,8%
-3,0%
Honduras
-2,3%
-5,8%
Nicaragua
-4,3%
-6,3%
Panamá
-2,0%
-2,0%


See "Regional Outlook" as of June 2020.



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More on this topic

Economic Growth: Year-End Forecasts

October 2020

According to IMF forecasts, Panama and El Salvador are the economies that in 2020 will report the worst falls in their production, while Guatemala would be the country in the region that would emerge best from this economic and health crisis.

Due to the severe economic crisis generated by the covid-19 outbreak, the economic growth projections calculated by international organizations are not at all encouraging for Central America.

Economic Growth: Optimism at the End of 2020

August 2020

Variations indicating a certain improvement in the world economy, the reopening of different markets and the recovery of exports are some of the factors that could influence Guatemala's economic activity to decrease less than expected in 2020.

In this context of economic crisis resulting from the outbreak of covid-19, the Economic Commission for Latin America and the Caribbean (ECLAC) predicted in April that the Guatemalan economy would fall by 1.3% at the end of 2020. According to the projections updated in July, the contraction of the Gross Domestic Product would be worse, as the forecast was for a -4.1% variation.

Economy: Slight Improvement in Central America

October 2019

After the economies of the region grew by 2.6% in 2018 as a whole, the IMF estimates that 2019 would close with a rise of 2.7% and could reach 3.4% by 2020.

The document "World Economic Outlook", prepared by the International Monetary Fund (IMF), states that for Panama the projected growth of the Gross Domestic Product (GDP) for 2019 was reduced from 5% to 4.3%.

Guatemala: 2019 Better Than 2018?

December 2018

The Bank of Guatemala expects next year's economic growth to be better than in 2018, which would be caused by higher public spending and the growth of family remittances.

Authorities of the Bank of Guatemala (Banguat) informed that the Guatemalan economy will close 2018 with a nearly 3% growth, however, for next year is expected that the increase in GDP will be in the range between 3% and 3.8%.

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