Exports: Negative Outlook for the Northern Triangle

If the international prices of bananas, coffee, sugar and palm oil do not improve, and if combined with a global economic recession, Guatemala, Honduras and El Salvador could stop exporting as much as $2.268 million altogether in 2021.

Thursday, September 12, 2019

According to the report "Proceso de integración Centroamericana del Triángulo Norte: Escenarios de riesgo en la matriz de exportación" (Central American Integration Process of the Northern Triangle: Risk Scenarios in the Export Matrix), prepared by the Asociación de Investigación de Estudios Sociales (Asíes), garment making is another activity that could be affected in the coming years.

Pablo Urrutia, a consultant for Asíes, told Prensalibre.com that "... of these products, the most unstable in terms of prices in recent years is palm oil. A fall in prices would be shocking for the three economies because of their dependence on the export matrix and, in turn, on domestic aggregate demand."

CentralAmericaData reports indicate that in recent years the average price of palm oil exports from Central America has reported a downward trend, from $1.13 per kilo in May 2012 to $0.53 per kilo in March 2019.

Regarding the effects in each country, Urrutia added that "... The most affected are Guatemala and Honduras for their export matrix, but not El Salvador, which is an economy that generally imports more."

The Asíes report details that Guatemala would stop selling about $767 million, Honduras about $1,185 million and El Salvador about $316 million.

Among the recommendations to reduce these effects, the report highlights that countries should invest more in ports, airports and highways, and bet on regional industrial parks strategies. In addition to advancing in terms of innovation and technology.

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