The region is expected to conclude 2018 with a rise of just over 4% in the volume exported and just 3.6% in value, due to the fall in international prices of several agricultural products.
According to the International Trade Outlook for Latin America and the Caribbean 2018, published by the Economic Commission for Latin America and the Caribbean (ECLAC), it is expected that this year Central America will export larger volumes at lower prices.
Because of the drought and the decrease in international prices, the trade guilds of the sector in El Salvador are projecting a decrease in production for the next harvests.
Marcelino Samayoa, CEO of the Asociación Salvadoreña de Beneficiadores y Exportadores (Abecafé), explained to Elmundo.sv that "... The drought registered in 2018 caused a slow increase in the ‘bandolas’, which are the branches of the coffee segments that should be there for 2019/2020.
Excessive regulation, increased tax charges and geopolitical uncertainty are the main risks to business growth in the region for Central American CEOs.
PricewaterhouseCoopers (PwC) conducted the Global CEO Survey in the Central American region, in which a group of business executives from Central American countries and the Dominican Republic shared their opinions about their economic expectations.
Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.
The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.
Plant diseases such as rust in coffee plantations, added to an oversupply of sugar worldwide, explain some of the moderate expectations that entrepreneurs have for some of the most important agricultural products in the region.
Representatives of the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif) of Guatemala believe that the deceleration that has been registered in international prices of some raw materials and agro-industrial products suggest a decline in local production.
The Salvadoran union for the sector foresees that investments in construction between 2018 and 2019 will add up to $1.4 billion, driven mainly by the execution of several public projects.
The Salvadoran Chamber of the Construction Industry (Casalco) reported that with the investment estimated for this and next year, it is expected that about 136 thousand jobs will be created.
The textile guild has stated that 2017 closed with $2.6 billion in exports and an increase of almost 4%, and for this year it plans to achieve similar growth.
The Chamber of the Textile, Clothing and Free Trade Zone (Camtex) exported $2.617 billion during the past year, $95 million more than the value of exports registered in the previous year.
Salvadoran business owners point out that the main causes of the country's poor economic performance is still growing insecurity and a lack of a clear political course.
The Salvadoran business chambers agree that the beginning of the year has not been the best, since the obstacles that for several months have made it difficult to operate and grow private sector activities still remain.
Projections are that this year growth of the Central American insurance sector will be driven by activities in the markets of Costa Rica and Guatemala.
From the report "Prospects 2018: Insurance Sector in Central America" by Fitch Ratings:
Stable Rating Perspective:The rating outlook for the Central Americaninsurancesectoris stable for 2018, given that most of the rated companies maintain a stable outlook on an individual basis.Fitch Ratings believes that the sector shows stable fundamentals, as a result of good profitability levels and high liquidity and capitalization indicators in all countries, which it expects to continue to be reflected in solid balance sheets in companies.
The key factor driving the rating upgrade is the significant reduction of the government liquidity risks, as political agreements have led to Congress´approval of long-term government financing and pension reform.
Risk rating firm Moody's announced on Friday, February 23 that El Salvador's debt was rated B3, which represents an improvement from the previous rating of Caa1.However, the country is still considered an issuer with risk of not fulfilling its obligations.
Citizens are less than two months away from going to a ballotage to elect a new government without having discussed the country's priority issues, even though some of them require urgent attention and a deep national discussion in order to find a solution.
Construction entrepreneurs estimate that the execution of around 160 projects could generate 3% growth this year.
In 2014 and 2015 statistics produced by the builders' association registered drops of 11% and 2% respectively, but this year the situation could change, as they foresee that the execution of 160 public and private projects will generate a growth of up to 3% in activity.
Global coffee output for 2017/18 is preliminary estimated at 158.78 million bags, 0.7% higher than last year.
Total production of Arabica is estimated to decrease by 1.1% to 97.32 million bags compared to 98.42 million bags last year, as lower production of Colombian Milds and Brazilian Naturals are only partially offset by increases in Other Milds.
Despite a recovery in exports, the difficulties in attracting foreign investment and the meager growth in credit to the private sector explain the projections for this year.
The National Foundation for Development (FUNDE) believes that the performance of the Salvadoran economy this year was very fragile, and they expect to close the year with growth of between just 2% and 2.3%, which barely exceeds the growth rate.
The World Bank projects that the price of a barrel of oil will rise to $56, metal prices will stabilize, gold prices will tend to rise and agricultural prices will increase, due to a decline in supply.
From a report by the World Bank:
WASHINGTON, October 26 - Oil prices are forecast to rise to $56 a barrel in 2018 from $53 this year as a result of steadily growing demand, agreed production cuts among oil exporters and stabilizing U.S. shale oil production, while the surge in metals prices is expected to level off next year, the World Bank said on Thursday.