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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More on this topic

Economy: Forecasts in Line with Reality?

November 2020

According to the Central Bank, this year the Costa Rican economy will contract by 4.5%, an estimate that would be optimistic in the current context of fiscal and economic crisis, uncertainty, distrust and lack of decisions in the transcendental issues facing the country.

The recent results of local production and the new estimates of global economic activity have allowed the Central Bank of Costa Rica (BCCR) to revise its economic growth projections for the country: the economic contraction for 2020 is expected to moderate to 4.5%, from the 5.0% predicted in the 2020-2021 Macroeconomic Program Review of last July. For 2021, an annual increase in production of 2.6% is projected, a figure 0.3 percentage points (p.p.) higher than that also announced in July.

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.

Dark Economic Outlook

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.

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.

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