Economic Growth: Improved Forecasts for the Region

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.

Thursday, January 14, 2021

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%.

In the case of Costa Rica, it varied its growth forecast for this year from -0.4% to 2.6%, and in the case of Guatemala it raised it from -0.5% to 3.6%.

The document states that during 2021 Honduras will no longer grow 0.1% as projected in June 2020, but its production will vary by 3.8% at the end of this year.

The forecasts for El Salvador rose from 0.8% to 4.6% and for Panama from 0.9% to 5.1%.

Summary table of economic growth forecasts published in June 2020, versus those disseminated in January 2021:

2021 forecast published in June 2020
2021 forecast published in January 2021
Costa Rica
El Salvador

Check out the "System for monitoring markets and economic situation in Central American countries", developed by CentralAmericaData.

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Which Economies Have Recovered the Most?

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As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.

Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19.

Economic Growth: Year-End Forecasts

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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.

Costa Rican Economy: Forecasts Worsen

July 2020

In April the Central Bank of Costa Rica predicted that by the end of 2020 GDP would fall by 3.6%, but due to the current health and economic crisis scenario the projections worsened, and now a 5% contraction in production is estimated.

The effect of the current international situation would be transmitted to the national economy through various channels: growth in trading partners, lower prices of raw materials and financial conditions, according to an official report.