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.
Because of the fall in economic activity and the restrictions imposed to contain the spread of covid-19, businessmen in Costa Rica and Panama predict that the process of economic recovery will not be completed in the near future.
In this crisis scenario generated by the covid-19 outbreak, the Costa Rican economy does not show clear signs of recovery, since during November 2020 the Monthly Index of Economic Activity reported a year-on-year fall of 6.2%, a decline similar to that reported in October, when it was 6.3%.
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.
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%.
At a time of economic slowdown, companies must immediately review business models and identify opportunities arising from the creation of new market niches.
In Central America, during the first half of the year, at least four of the six economies reported declines in productive activity. The most dramatic case is that of Nicaragua, which in February recorded a 7% year-on-year drop in the Monthly Index of Economic Activity (MIEA), a situation reported since the political crisis began in April 2018.
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 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"]
Inflation deceleration and Risks to economic recovery.
The quarterly report from the Executive Secretary of the Central American Monetary Council (SECMCA) focuses on the region's inflation and recovery prospects.
Inflation, measured by year-on-year change in consumer prices, slowed in the second quarter of 2010 to 4.9%, compared to 2.9% in June 2009. This level is within the target limits set by the region's central banks.
Central American countries still need to improve their economic performance to reach investment grade ratings.
On its Quarterly Country Risk report for June 2010, the Central American Monetary Council (SECMCA), notes that Moody’s Investor Service improved the foreign currency risk ratings for Guatemala and Nicaragua. For Guatemala, the criteria for this improvement included a stable macroeconomic environment, backed by prudent fiscal and monetary policies, and for Nicaragua improvement in debt indicators and low fiscal deficits.
Monthly Index of Economic Activity (IMAE), exports, remittances, international reserves, exchange rates, inflation, tax collection, banking system, foreign investment, tourism and outlooks.
Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
One year after the fall of Lehman Brothers, SECMCA analyzes the international situation, and Central America's perspectives and current situation.
Production continues to fall, as evidenced by the Central American Monthly Economic Activity Index, confirming a process started on the last trimester of 2008. June's variation was -1.9% when compared to the same month of the previous year.
Inflation, Economic Growth, Trade, Fiscal Sector and the Monetary Sector.
Regional inflation has considerably decelerated in the past quarters, as a result of the application of a series of prudent monetary policy measures, and some exogenous factors related to the abrupt deceleration of the global economy.
However, after overcoming the worst phase of demand reduction and now witnessing signs of economic recovery, there is upwards pressure, fueled by increases in the international price of commodities, inflation imported from trade partners, and a reduction of liquidity in domestic markets.
Banks credit intermediation and its influence in the generation of goods and services on behalf of the productive system.
In a SECMCA report, Nelson Oswaldo Ramirez presents a brief analysis of the development of banking credit in comparison with the region's economic activity in the first five months of the year. In the way he studies relationships that may exist between the variables of Credit and GDP.
Exports and Imports, Remittances, Economic Activity, Exchange Rate and Inflation in the 2009 SIECA Statistical Report.
The SIECA Secretary General, Yolanda Mayora de Gavidia presented the report as follows:
Central American economic integration is subject to permanent changes to individual member countries, regionally and internationally.
In this regard, in the middle of 2008, the economies of developed countries started to register monetary and financial imbalances globally and affected the real sector by reducing economic activity and generating high volumes of unemployment.