Economy and Outlook for 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.

Wednesday, March 31, 2021

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.

Growth forecasts for Latin American economies prepared by the World Bank and published in March 2021, indicate that Panama will grow 9.9% at the end of the year, the Dominican Republic 5.5%, Honduras 4.5% and El Salvador 4.1%.
 
Guatemala is expected to increase its Gross Domestic Product by 3.6%, Costa Rica's economy will grow by 2.6% and Nicaragua could increase its production by 0.9%.

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

According to the World Bank "... the sharp contraction caused by the pandemic last year had enormous economic and social costs. The unemployment rate in general increased and poverty soared, although in some countries the massive use of social transfers did much to cushion the social impact of the crisis."

For the international organization, the Covid-19 crisis will have a long-term impact on the economies of the region. Lower levels of learning and employment are likely to reduce future incomes, while the high level of public and private indebtedness may cause stress in the financial sector and slow the recovery.

Despite these challenges, there are positive areas. International trade in goods remained at a relatively good level, despite the sharp drop in trade in services, particularly tourism. Most commodity prices are higher than before the Covid-19 crisis, partly thanks to China's early recovery.  This is a good thing for exporters of agricultural and mining products. Remittances to the region are up compared to the pre-pandemic period, a very important issue for several Caribbean and Central American countries, according to an official document. Download full report.

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More on this topic

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: Year-End Forecasts

October 2020

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.

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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