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

Economy and Outlook for 2021

March 2021

The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.

After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.

Economic Growth: Improved Forecasts for the Region

January 2021

The World Bank has improved economic growth projections for all Central American economies for 2021, with Honduras, El Salvador and Panama having the most promising forecasts.

In June 2020, when the health and economic effects of the pandemic that caused the covid-19 outbreak were beginning to be reported, the World Bank predicted that in 2021 Nicaragua's Gross Domestic Product would decrease by -1.6%, but in a January 2021 publication it projected that the drop would be -0.9%.

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%.

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