The pessimism expressed by consumers in Costa Rica and the constant deterioration of business expectations in Guatemala reflect part of the complex challenges faced by Central American economies this year.
A report prepared by the School of Statistics of the University of Costa Rica (UCR) shows the negative trend that come showing the economic expectations, because between February 2018 and the same month of 2019, the Consumer Confidence Index (ICC) fell 15%.
During 2018, the country registered exports of electric energy for $181 million, 76% more than reported in 2017, and its main buyers were El Salvador, Honduras and Mexico.
The most recent data from the Bank of Guatemala show that last year Guatemala sold $119 million in electricity to El Salvador, $37 million to Honduras, $1.2 million to Nicaragua and $930,000 to Costa Rica.
Limiting the fees charged in Costa Rica and establishing a law that defines market limits in Guatemala are part of the attempts being made in the region to regulate the use of credit cards.
A law proposal presented last January before the Legislative Assembly of Costa Rica, aims to regulate the percentage of the commission paid by businesses for credit or debit cards.
From January to November last year, the country exported $165 million in electricity to Mexico and Central America, 73% more than in the same period in 2017.
The Report of the Monetary, Exchange and Credit Policy of the Banco de Guatemala, details that the energy exportations are mainly caused by the investments made in the electricity transmission network of the country, which has allowed satisfying the increase of the demand coming from El Salvador and Honduras.
Detections have been made of cash transfers which are then returned via wire transfers and which apparently are linked to drug dealing and extortion.
The information was confirmed by the president of the Bank of Guatemala, Edgar Barquín, who explained that from Guatemala cash is exiting in dollars and going to El Salvador and then returning to the country through wire transfers.
Central America and the Dominican Republic have agreed together to ensure financial liquidity, create mechanisms for monitoring risk management and financial systems, as well as taking measures against the effects of the euro zone crisis and the weakness of U.S.
Carlos Acevedo, president of the Central Reserve Bank of El Salvador, told Prensalibre.com that "we are preparing a regional financial system and shielding mechanisms."
The U.S. could be facing a possible reduction in their risk rating, due to levels of national debt and government deficit.
Democrats and Republicans have been debating in the United States Congress trying to reach an agreement that will raise the debt ceiling and secure public finances for the future, avoiding a potential cessation of payments or a reduction in the country’s risk rating.
By the end of February the Regional Interconnection Payments System (SIP) will be operational.
The new system will allow banking institutions in Central America and the Dominican Republic to receive electronic transactions at a lower cost than through private banks.
"According to the structure submitted by Sergio Recinos, financial manager at Banguat, to representatives of the Banking Association of Guatemala, the cost per transaction using SIP will be $5 and will be open to all banks operating in the region and with an account at their central bank," reported Elperiodico.com.gt.
Trade between Central American countries decreased 17% in the first third of 2009, when compared to the same period of 2008.
According to data from the Central American Economic Integration Secretary, exports between the countries of the region reached $1.74 billion, $356 million less than the first third of 2008 ($2.1 billion).
Prensalibre.com reports: "The figures do not include apparel and textile exports".
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
Exports by the textile and manufacturing sector have been in the reporting in the red for the last four years in Guatemala.
Based on business reports from the sector, the main reasons is the incursion of China in the world market for these products since 2005, and the economic crisis that is affecting the United States.
Central Bank figures show that last year that had an increase in the external sale of clothing was 2004.
The installation of the regional Technical Assistance Center (in the Banquat building) is set for April 2009.
The center will have six technical experts who will offer assistance to governments on topics such as: Customs, multiannual budget preparation, and public debt.
The scope of action will be countries in Central America and the Dominican Republic, said Maria Antonieta del Cid de Bonilla, president of the Bank of Guatemala (Banquat).
Foreign currency earnings from exports to the international market grew 20.5% during the first eight months of 2008 in relation to the same period in 2007.
The Bank of Guatemala indicated that between last January and August, some $3.43 billion were earned from sales abroad.
During the same period in 2007, Guatemala received some $2.83 billion, according the information on the bank's website.
No matter what the cause, the old remedy for rising inflation was restricting liquidity with the increase of interest rates and a virtual paralyzing of credit markets, says César A. Garcia in a column in the Guatemala newspaper Prensa Libre.
Garcia continues: The President of the Bank of Guatemala, Maria Antonieta de Bonilla, announced in an interview Monday that the Monetary Committee will stop the rise in prices, which create an impoverishing rate of inflation of 12 percent per year.