One Year of Crisis: How are Economies Recovering?

Twelve months after Central America began a health and economic crisis triggered by the covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.

Monday, March 8, 2021

In March 2020, the first cases of covid-19 began to be detected in the countries of the region. The highly contagious disease, which at that time had already claimed the lives of thousands of people around the world, forced Central American governments to establish mobility restrictions.

Closures of stores, restaurants and borders, restrictions on the movement of vehicles, suspension of passenger transportation, prohibition of shows and mass events, became the new normal for Central American economies.

Starting in the second half of 2020, the countries began the process of de-escalation of domestic quarantine and reopening of the economy. Although few restrictions still apply in the six countries of the region, economic recovery has proceeded at different speeds.

Guatemala was the country that most quickly recovered the dynamism of its economic activity. The latest report from the central bank indicates that after bottoming out in May last year, when production decreased 11% year-on-year, during December 2020 and January 2021, increases of 5% and 3%, respectively, were recorded.

In the case of Nicaragua, an economy in which no production activity was restricted, production decreased 3% during 2020. This decline is because the country's main trading partners faced severe economic crises, a situation that impacted local production levels.

Between December 2019 and the same month of 2020, Costa Rican economic activity contracted 5%, with the commercial and tourism sectors being among the most damaged in this context of health and economic crisis.

El Salvador and Honduras have been among the countries that are taking the longest to recover the dynamism of their economies, since in 2020 production levels decreased 6% and 9%, respectively.

Panama is the economy that shows the most damage, since in May 2020 the drop in economic activity exceeded 31%, and although in the following months production recovered dynamism, as of November of last year the year-on-year variation was -14%.

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

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