Franchise Business Forecasts

Because of the slowdown in the economy and the entry into force of new taxes, in 2020 is expected a slight growth of 1% in the number of franchise brands in Costa Rica.

Friday, July 19, 2019

In the last year, the growth in the number of franchises reported a significant slowdown, since the figures of the guild specify that up to May this year the net number of brands reached 361, a value that exceeds by just 0.6% the 358 registered in the same month of 2018.

Karol Fallas, director of the National Franchise Center (Cenaf), explained to that "... the slight increase responds to the economic context in which the country lives since last year. In addition, the entry of new taxes could also mean an important weight for future business. That's why the growth projection for next year is reserved: just 1%."

See "Economic Activity Does Not Rebound

Regarding the low economic dynamism in the country, the Monthly Economic Activity Index reported in May a 1.3% year-on-year increase, one of the lowest growth rates reported in recent years, since a similar variation had not been registered since November 2013.

Fallas added that "... The companies that closed in 2018 is attributed to not being able to contain their operating costs in this context, but if they are selling they cannot stop paying operating costs and as there is a fall in sales, because there is less consumption by uncertainty, in the end what happens is that they contract, cut expenses where they can, but there are companies that cannot do it at all."

Regarding the distribution of franchises by type, Cenaf statistics detail that 56% correspond to individuals, 18% to regional and 10% to master.

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More on this topic

Economic Growth: Businessmen's Predictions

December 2019

In Guatemala, 54% of businessmen believe that in 2020 the local economy will accelerate, 42% believe that stable growth will be reported and 4% believe that a slowdown could be reported.

According to the Third Business Perception Survey conducted by the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif), 67% of respondents expect greater growth of their companies and 56% expect more employment with the arrival of the new government.

Business Confidence: Good Numbers Continue

December 2019

In November of this year, the Index of Confidence in Economic Activity in Guatemala reported a 28% growth with respect to the same month in 2018, reinforcing the upward trend that has been registered since July 2019.

Businessmen forecast an inflationary rhythm of 3.34% and 3.54% for November and December 2019, respectively, as well as 3.69% for January 2020.

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%.

Economic Expectations Continue to Decline

July 2018

Reinforcing the trend reported since last year, in June 2018, the Confidence Index of Economic Activity in Guatemala fell by 36% compared to the same month in 2017.

In the most recent Economic Expectations Survey conducted by the Banco de Guatemala, an inflationary rhythm of 4.25% for June, 4.24% for July and 4.37% for August 2018 is forecastAs for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.47% for both years. In addition, for a horizon of 12 and 24 months (June 2019 and June 2020) the Panel forecasts an inflationary rhythm of 4.35% and 4.43%, respectively. 

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