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.
One of the best parameters of the strength of an economy is the amount of businesses it creates. In Panama, 47% fewer companies were created in 2017 than in 2016.
Not only were fewer companies were created in 2017, but more companies were closed than in 2016.
Although growth of the economy in general still remains above 5% -still far from the vigorous 10% of a few years ago- other macro data, such as the increase in unemployment and the growth of independent or informal work, shows that, starting in 2018, Panama has entered a phase of economic slowdown.Businessmen in the commerce sector are even talking about "recession", both in retail and in wholesale sales.
CentralAmericaData's Central American Economic Activity Index registered interannual growth of 3.8% up to September.
Figures from the Information System Central American Macroeconomic Monitoring, by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with the graphic"]
The Central American Economic Activity Index, prepared by CentralAmericaData, recorded a year-on-year growth of 3.4% as of August.
Figures from the Information System Central American Macroeconomic Monitoring by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption="Clic para interactuar con la gráfica"]
The higher the percentage of wages paid by employers, the less formal employment will be generated, particularly affecting unemployed young people and distorting the economy by rewarding informality.
This is notorious in Costa Rica, where despite sustained growth of the economy in recent years, unemployment remains at around 10% of the economically active population, and informality represents around 40% of employment.
The tax burden grew from 13.4% in 2013 to 14% in 2016, both due to the delayed effect of the tax reforms in Honduras and Nicaragua, as well as better management on the part of tax entities in Guatemala and Panama.
From the Regional Economic Report (IER) 2016-2017: Opportunities and challenges for Central America, by the SIECA:
Sustainable economic development requires the maximization of these three factors in a combined form.
EDITORIAL
- There is no use opening a country to the world if you do not have the minimum capacities to compete in international markets.
- To base development on offering a list of a few products or services to the worldgenerates a dangerous dependence of their value in the market or on fluctuations in their production.
The monthly index of economic activity in the region, compiled by CentralAmericaData, registered a year-on-year growth of 3% in April.
Figures from the Information System ´Central American Macroeconomic Monitoring´ by the Business Intelligence Unit at CentralAmerica Data: [Figure caption = "Click to interact with the graphic"]
In an unstable exchange market, lack of transparency in the rules on intervention by the Central Bank of Costa Rica increases uncertainty and drives investors towards the safest currency.
EDITORIAL
The rise in the price of the dollar in Costa Rica is a negative factor for some sectors and positive for others, but generally negative for the economy, because it distorts companies' plans, diminishing their competitiveness, and because it increases market players' willingness to speculate.
In the view of Fitch Ratings, the likelihood of the trade agreement being renegotiated is low, but the region faces challenges "if US protectionism gains traction over the next few years."
From a statement issued by Fitch Ratings:
Fitch Ratings - New York - (May 16, 2017): While Central America and the Dominican Republic could benefit from the expected economic acceleration in the United States, these countries could also face challenges if US protectionism were to gain traction in the coming years, says Fitch Ratings.
Costa Rica 's estimated illicit financial flow averages 45% of its total foreign trade, and the incoming amount is 2.5%; For El Salvador these figures are 9% and 7.5%, for Guatemala 9% and 1.5%, for Honduras 31% and 28%, for Nicaragua 13% and 9%, and for Panama 16% and 307%.
A report by Global Financial Integrity (GFI) entitled "Illicit Financial Flows to and from Developing Countries: 2005-2014" concludes that the illicit flow of money to and from developing countries remains at high levels.The purpose of the report is to quantify those illicit financial flows that represent a serious disadvantage to economic development.
The US president is already putting into practice his premise "America First", which leads Central America to anticipate negative changes in the flow of remittances from that country.
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
Icefi recommends changing the economic and fiscal model in Central America in light of possible adoption of radical US policies.
The current national accounts methodology could be causing an underestimation of the value and potential of an industry that has become a success.
In his article in Ca-bi.com, Paulo de León objects to the failure to update the Guatemalan national accounts system, resulting in an underestimation of the weight of the sector in the Guatemalan economy, as that system does not incorporate the shift in the energy matrix towards renewable energy.
Collaboration through innovation and technology allows for better use of available resources, providing a new opportunity to narrow the gap with the developed world.
From a report by the Inter-American Development Bank "Sharing Economy
in Latin America":
"... Collaborative Economics (CE) not only provides a promising new learning framework for Latin America and the Caribbean, but also a space for the region to be part of the Fourth Industrial Revolution ... This new paradigm offers significant opportunities to promote social inclusion, promote entrepreneurship and unleash a wave of innovation that can help solve some of the major social, economic and environmental problems of the inhabitants of the region. "
The report "Social Panorama of Latin America" makes clear that declines in poverty rates are directly related to the rate of growth in revenue and are not the result of distribution policies.
The recent report published by Cepal, called "Social Panorama of Latin America" highlights countries which reduced poverty levels through improved income, not redistribution of that income, as is the case of Panama, Colombia and even Uruguay, which was the country that best fought poverty between 2010 and 2014. The report explains that the general improvement in that period was mainly due to changes in average incomes.