"Growth remains susceptible to adverse shocks to global growth, economic and socio-political stress in Nicaragua, the continued weakness in consumer and business confidence, and uncertainty regarding the implementation of the fiscal reform.”
After the slowdown in growth between 2017 and early 2019, the economy has recovered since mid-2019, as a result of a rebound in services, agriculture and manufacturing, which produced an estimated 2.1% growth in 2019, reported the International Monetary Fund (IMF).
The entity and the Honduran government agreed to "a combined credit facility of Special Drawing Rights and 24-month Extended Credit Service, for $311 million."
For the country's business sector, the agreement between the International Monetary Fund and Honduras "represents a commitment by the government to maintain macroeconomic stability, a fundamental pillar that favors the country's competitiveness and creates the minimum conditions for the promotion of investment. See "Cohep Expects IMF Agreement to Maintain Macroeconomic Stability".
For the IMF, the political agreements reached by the elected government in El Salvador with the parties that dominate the Legislative Assembly will be crucial for the successful implementation of a country agenda.
The IMF staff team visited San Salvador during March 11—22 for the 2019 Article IV consultation and held candid discussions with the current authorities, the President-elect, parliamentarians, business community, and social partners.
Arguing that inflation expectations are within the target range, in Costa Rica the Central Bank decided to keep the monetary policy rate unchanged.
The last increase in the monetary policy rate was made in early November 2018, when the Central Bank of Costa Rica (BCCR) decided to raise it from 5% to 5.25%, arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range.
According to the IMF, in the first half of the year, the Salvadoran economy increased above the estimated potential, the inflation remained low and the fiscal position was better than expected.
From the International Monetary Fund statement:
An International Monetary Fund (IMF) team, led by Ms. Alina Carare, visited San Salvador from November 12 to 16, 2018 to discuss recent economic and financial developments.
Following the IMF assessment, the country's macroeconomic conditions are expected to remain strong and growth is expected to be solid in coming years.
From the International Monetary Fund statement:
November 16th, 2018. An International Monetary Fund (IMF) team led by Esteban Vesperoni visited Tegucigalpa from November 12-16 to assess recent economic developments since the completion of the 2018 Article IV consultation in May and the medium-term outlook. At the end of the visit, Mr. Vesperoni issued the following statement:
S & P has downgraded the debt rating from B + to B, arguing that the escalation of the internal conflict has weakened governance, and the rating could be reduced again in the next 12 months if the violence continues to rise.
From a press release by Standard & Poor´s:
Heightened domestic conflict and ongoing violence have weakened governability and impaired the predictability and effectiveness of policy implementation in Nicaragua, in our view.
In spite of the economic progress that has been achieved in Costa Rica, employment growth has stagnated, results in education are deficient, and anti-competitive regulations continue to hinder business development.
The latest OECD economic study on Costa Rica details the factors that support the significant socio-economic achievements of the last decades, as well as the pending challenges to ensure sustainable and more inclusive growth.
Last year, economic activity and employment generation continued to rise, cumulative inflation reached 5.7% and international reserves were strengthened.
From a statement issued by the Central Bank of Nicaragua:
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.
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.
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 :
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