The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.
After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.
During 2020 in all countries of the region, construction activity decreased considerably and Central American cement imports stagnated, this adverse scenario is explained by the economic crisis generated by the pandemic.
The construction industry statistics system, which is part of the interactive platform "Construction in Central America" of CentralAmericaData's Business Intelligence area, compiles the most important industry data for each of the countries in the region.
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.
The World Bank has improved economic growth projections for all Central American economies for 2021, with Honduras, El Salvador and Panama having the most promising forecasts.
In June 2020, when the health and economic effects of the pandemic that caused the covid-19 outbreak were beginning to be reported, the World Bank predicted that in 2021 Nicaragua's Gross Domestic Product would decrease by -1.6%, but in a January 2021 publication it projected that the drop would be -0.9%.
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%.
Although the end of the year holidays is a threat to Central America for a second wave of covid-19 infections, it is expected that total closures will not be decreed since there are currently effective health control options, and less costly for the economy.
When the first cases of covid-19 were reported in the region in March 2020, most governments decided to paralyze a large part of productive activities and decree home quarantines.
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%.
Understanding the economic environment the company is facing, generating projections in real time and having the opinion of external consultants to the organization, are some of the strategies that could help companies in times of low sales.
In Central America, during the first half of the year, some economies reported declines in their productive activity.
Avoiding hurried discounts, managing price increases according to costs and improving cash flow are some of the strategies that companies can resort to protect their profitability in contexts of inflation and recession.
Ariel Baños, a price management specialist and founder of Fijciondeprecios.com, explains four strategies for maintaining profitability when companies face scenarios of rising prices and low dynamism in economic activity.
Faced with the threat of a global economic slowdown and the possibility of the U.S. entering recession next year, businessmen in the region argue that to mitigate possible adverse effects, it is key to diversify export destinations.
Market analysts assure that the slowdown in U.S. economic activity is already a reality, and that what is still not clear, is the possibility that the economy will go into recession next year.
Making real sales projections, segmenting prices and designing savings options are some of the strategies that companies can use to protect their profitability in contexts of inflation and recession.
Ariel Baños, price management specialist and founder of Fijciondeprecios.com, details techniques that could help companies avoid negative effects on their finances, when faced with scenarios of rising prices and low dynamism in economic activity.
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.
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.
The implementation of two applications used for home delivery services in Guatemala reinforces the irreversible trend towards better use of available resources through innovation and technology.
One of the applications now available is Uber Eats, which lets people place orders from different restaurants with varied prices.Another of the companies that has started up is Glovo, dedicated to the purchase, reception and shipping of several product categories.