During March 2021, the Monthly Index of Economic Activity reported a variation of 13% when compared to the levels reported in the same month of 2020, a period that was marked by the closure of the economy due to the pandemic.
The economic activities that most contributed to the positive result were: Manufacturing Industry and Commerce, and to a lesser extent, Mail and Telecommunications, Financial Intermediation and Other Services -related to health and net taxes-. These contributions were partially offset by the negative variations in agricultural activities, Transportation and Storage, and Hotels and Restaurants, highlights the report of the Central Bank of Honduras (BCH).
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.
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.
As a result of the pandemic in May 2020, the IMAE hit bottom by falling 22% year-on-year, but from June onwards, smaller falls began to be reported and in October the decline was barely 1%; however, in November the country fell back by 12%.
National production, measured through the original series of the Monthly Index of Economic Activity (IMAE), reflected a 12% year-on-year decrease in November 2020, determined by the negative impact of the pandemic, to which was added the losses in production due to the flooding caused in the national territory in the first half of November by the occurrence of tropical storms Eta and Iota.
As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.
Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19. The strict quarantines decreed, the closure of borders and commercial establishments, ended up damaging the dynamism of productive activities.
The World Bank projects that the Central American economy will contract by 3.6% this year, due to restrictions on movement, a decline in remittances and tourism, and a drop in agricultural prices.
The sudden and widespread impact of the coronavirus pandemic and the measures taken to contain it have caused a drastic contraction in the global economy, which, according to World Bank forecasts, will shrink by 5.2% this year, the bank reported on June 8.
Financial Intermediation, and Manufacturing Industries, largely determined the 2.5% increase in GDP during the fourth quarter of last year, compared to the same period in 2018.
Financial Intermediation, Insurance and Pension Funds increased 1.7%, boosted by income received from commissions and interest on the loan portfolio, reported the Central Bank of Honduras.
Agriculture, livestock, forestry and fisheries, and financial intermediation largely determined the 2.4% increase in GDP in the third quarter of last year, compared to the same period in 2018.
Agriculture, Livestock, Forestry and Fishing registered a 2.6% increase, mainly because of the rise in the Gross Added Value (GVA) of coffee cultivation as a result of reseeding, maintenance and fertilization in the farms during the third quarter, informed the Central Bank of Honduras (BCH).
According to the IMF, Honduras has experienced a moderation in economic growth in recent quarters, but a recovery is expected next year.
Honduras has made significant progress in implementing its economic program, which aims to foster inclusive growth through prudent macroeconomic policies and structural and governance reforms, according to the international organization's report.
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%.
Construction and financial intermediation largely determined the 1.9% increase in GDP in the second quarter of the year compared with the same period in 2018.
Financial Intermediation increased 1.2% during the second quarter of 2019, explained by the increase in income received by financial institutions from commissions on financial services (credit and debit cards, drafts and transfers, account management and trusts), plus interest derived from the credit portfolio, reported the Central Bank of Honduras.
Financial Intermediation and the Manufacturing Industry determined to a large extent the 3.5% increase registered in the Gross Domestic Product during the first quarter of the year, with respect to the same period of 2018.
From the Central Bank of Honduras report:
The following activities stand out for their contribution to the quarter's results: Financial Intermediation (0.5 pp); Manufacturing Industry (0.2 pp); and Transport and Storage (0.1 pp) 5/ ; however, growth was attenuated by negative behavior in Agriculture, Livestock, Forestry and Fisheries; and Construction (0.2 pp each).
The behavior of the activities of Financial Intermediation, Agriculture, Livestock, Forestry and Fisheries, explained part of the year-on-year increase of almost 5% reported in the Gross Domestic Product during 2018.
In the fourth quarter of 2018, the seasonally adjusted series reflected a real GDPT4 growth of 1.2% over the previous quarter, year-on-year (compared to the fourth quarter of 2017) was observed a rise of 4.2%, so the accumulated annual variation rate stood at 3.7%, reported the Central Bank of Honduras (BCH).
"The tightening of global financing conditions is a concern for Central American countries with large current account deficits or those highly dependent on capital flows."
According to the report "World Economic Outlook - January 2019" compiled by the World Bank (WB), countries with a high external debt burden would be at risk if a sudden change in investor confidence in emerging market and developing economies were to occur.
Agriculture and communications largely determined the 3.1% increase recorded in the Gross Domestic Product during the third quarter of the year, compared to the same period in 2017.
During the third quarter of 2018, the out-of-season series of the GDPT showed a 0.7% increase in real terms, when compared to the level of the second quarter. With this, the GDPT increased 3.1% year-on-year, reaching an accumulated rate of 3.4% in 2018, informed the Central Bank of Honduras.