Economic Growth: Year-End Forecasts

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.

Thursday, October 22, 2020

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.

In the report "The Persistence of the Pandemic Clouds the Recovery of Latin America and the Caribbean", published by the International Monetary Fund (IMF) this month, the recovery of the region's economies will be unequal.

The IMF estimates that the economies of Panama and El Salvador will fall 9% by the end of 2020. In Honduras, the contraction of economic activity would amount to 6.6% and in the Dominican Republic, the decline would be 6%.

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

The economies of Costa Rica and Nicaragua are expected to contract by 5.5% in both cases. Guatemala would be the country that would best emerge from this crisis scenario, as its production would vary by only -2%.

The document explains that "... the solid recovery of remittances and exports and the low level of oil prices will contribute to a milder contraction in Central America, Panama and the Dominican Republic, while the Caribbean countries dependent on tourism will experience more severe recessions due to the drastic and prolonged decline in tourism.

After a widespread slump in activity in the second quarter, regional GDP is expected to rebound in the second half of 2020 and continue to gradually recover in 2021."

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Economy and Outlook for 2021

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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.

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Economic Growth: Optimism at the End of 2020

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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.

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June 2020

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.

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