Economy: How to Overcome the Recession?

Reducing costs and barriers to foreign trade in Central American economies is key for the region to overcome the economic recession caused by the outbreak of Covid-19.

Monday, April 26, 2021

A report prepared by the World Bank explains that boosting economic activity and employing a higher percentage of the labor force are objectives that can be achieved through reforms that strengthen the private sector and attract investment.

According to the document "Unleashing Central America's Growth Potential", presented on April 26, the costs for intra-regional trade and trade with Mexico are high and tariffs of up to 74% are maintained. reports that "... Jorge Thompson Araujo, manager of practice, macroeconomics and fiscal management of the World Bank, warned about the urgency of analyzing the sources of income for Central American countries, after the economic shock generated by the Covid-19 pandemic."

In one of its analyses, CentralAmericaData explained that 12 months after the beginning of the health and economic crisis in Central America caused by the Covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.

According to Melvin Redondo, Secretary General of the Secretariat for Central American Economic Integration (Sieca), "... the region must prioritize joint trade and leave behind the vision of competition between countries; to this end, Central America needs financing to unleash local growth potential and strengthen production chains".

Reducing transportation costs within the Central American region is another of the challenges that must be overcome to reactivate production more quickly.

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

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.

Economy Closures: What is Expected in 2021?

December 2020

Although the end of the year holidays is a threat to Central America for a second wave of covid-19 infections, it is expected that total closures will not be decreed since there are currently effective health control options, and less costly for the economy.

When the first cases of covid-19 were reported in the region in March 2020, most governments decided to paralyze a large part of productive activities and decree home quarantines. These actions focused on containing the advance of the virus caused a severe economic crisis in all countries.

El Salvador: $250 Million for Economic Reactivation

August 2020

CABEI approved a line of credit for the Salvadoran government to finance health care programs focused on mitigating the covid-19 outbreak and plans to reactivate the local economy.

Supporting macroeconomic stability, assisted by the Fiscal Responsibility Law, and strengthening the capacity to respond to the pandemic, through the programs that the government has implemented in response to the emergency, are two of the objectives that the loan approval is intended to fulfill.

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.