Supported by greater growth in the US economy, better monetary conditions and a moderate boost in government spending, growth should accelerate gradually until it reaches a rate of 3.6% in 2019.
The mission of the International Monetary Fund (IMF) recognizes the macroeconomic stability that has been achieved, but warns of a need to approve a fiscal reform that allows the tax burden to be increased to at least 15% of GDP, and allocate that additional income to public investment, especially in social development, particularly pre-primary education, preventive health care and greater pension coverage.
Claiming that in the last few months inflation expectations have increased, the Central Bank has raised the monetary policy rate from 4.75% to 5%, from February 1st.
The Central Bank argues that the price of oil has maintained a bullish behavior since July 2017. This situation, with a backlog, is transferring to the local price of fuels, with a potential transmission in the coming months towards other prices.
For the sixth time in the year and arguing future inflationary pressures, the Central Bank has raised the monetary policy rate to 4.75% as of November 30.
Consulted on the matter by Nacion.com, economist Alberto Franco said that "...Before the absence of clear signs of greater inflationary pressures and a slowdown in local economic activity in recent months, this measure, in my opinion, could seek, fundamentally, to preserve the premium for investing in colones, in the face of a very likely increase in the reference rate of the Central Bank of the United States, the FED, in this next month of December."
The fiscal deficit stands at historically low levels, inflation is moderate and the macroeconomic perspective is positive, but a continuous effort is required to improve social indicators.
From a statement issued by the IMF:
21 November 2017: The authorities’ commitment to their reform agenda has remained strong during the program, which has successfully stabilized the economy, restored confidence, and paved the way for accelerating growth and reducing poverty.
In its review of the monetary program, the Central Bank has raised the expected economic growth rate for the biennium 2017-18, from 3.4% - 3.7%, to 3.7% - 4.1%.
From the executive summary of the report "Review of the 2017-18 monetary program" by the Central Bank:
The Board of Directors of the Central Bank of Honduras (BCH), in fulfillment of its powers, presents the Monetary Program (MP) Review 2017-2018 published in March of this year. This document contains an update of the macroeconomic framework for the aforementioned biennium, adapting it to thefirst half of year of the international and domestic economy, as well as to the latest perspectives on the world economy.
Forecasts are for lower economic growth this year, driven by a weakening of the terms of trade and more restrictive financial conditions, caused by the high fiscal deficit.
From a press release issued by the IMF:
I. Recent Developments
1. Both output and growth are at potential, while inflation has reemerged and is rising moderately.
For the second time this month and arguing short-term inflationary pressures, the central bank has decided to raise the monetary policy rate from 2.25% to 2.50%.
This increase in the monetary policy rate follows the one announced on April 6, when the Central Bank raised it to 2.25%, before then it had remained at 1.75% since January 2016.
The Bank of Guatemala has kept the lead monetary policy rate at 3%, arguing that high levels of uncertainty still persist in the external economic environment.
From the report "Recent macroeconomic performance and prospects," by the Bank of Guatemala :
Global economic growth projections for 2017 and 2018 show that the recovery in economic activity will probably continue, albeit in an environment where high levels of uncertainty and downside risks prevail.Forecasts for international oil prices remain on the upside.
It is expected that economic growth will increase slightly to 5.1% in 2017, and about 5.5% in the medium term, supported by the expanded Canal and developing investment projects.
From a press release issued by the IMF:
Panama’s economy is expected to remain among the most dynamic in the region. The economic outlook is favorable, albeit set against the backdrop of heightened external uncertainty.
According to Fitch Ratings the reelection of Daniel Ortega as president of Nicaragua means stability in the country's economic policies.
EDITORIAL
Stability and economic and political continuity is what Fitch Ratings envisages for Nicaragua after the outcome of the presidential elections last Sunday, in which President Daniel Ortega was declared the winner, with 70% of the vote, according to a report by the Supreme Electoral Council.
The agency highlights the country's macroeconomic stability, while noting a slight deterioration of fiscal indicators in recent years.
From a press release issued by Moody's:
New York, October 25, 2016 -- Panama's Baa2 rating with a stable outlook reflects the country's strong economy and its broad macroeconomic stability, says Moody's Investors Service.
Gross domestic product recorded a variation of 4.47% in the first quarter of 2016, driven in part by a 4% increase in final consumption expenditure.
From a report by the Central Bank "GDP and balance of payments in the first quarter of 2016":
Economic activity in the first quarter grew by 5.4% (annualized quarterly change), a result that is associated with the positive developments in external demand which increased by 17.5%.This trend was reflected in increased product placement by companies in special regimes related to the sale of equipment and medical devices as well as therecovery in the export of bananas, pineapples and services (4.9% ).
The Central Bank insists on the risk posed by credit growth in dollars and the non-approval of structural measures to address the deterioration of public finances.
From the report on "Commentary on the national economy - May 30, 2016" by the Central Bank of Costa Rica: In accordance with the provisions of the Organic Law, the Board of the Central Bank of Costa Rica meets once a month to analyze the internal and external macroeconomic situation of the country. Not limited to only this, these discussions provide the elements needed to adopt ¿ monetary policy measures. The discussion for the month of May was held in session 5722-2016 on the 18th, in which the Board decided to keep the monetary policy rate at 1.75%. The external environment highlighted two elements. On the one hand, slow growth in advanced economies, which has had an influence on variation rates worldwide being still moderate; on the other, the upward trend in international prices of raw materials in the last three months.
Recognition is given to the efforts made in the fight against corruption and the resilience of the economy in the face of the political crisis in 2015, but it was noted that there are still vulnerabilities in the financial system.
From the report Article IV by the International Monetary Fund:
This note summarizes the findings and preliminary recommendations of the mission that visited Guatemala from May 18 to May 31 for the Article IV Consultation 2016. The mission wishes to thank the Guatemalan authorities for their outstanding cooperation and frank dialogue.
The IMF points to a greater vulnerability in the financial sector because of credit expansion in dollars and on the macroeconomic level because of the inability to reduce the fiscal deficit.
From a press release issued by the IMF:
On May 11, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Costa Rica.