The amount of inflation expected in 2015 is one of the reasons why the Monetary Board has decided to reduce the interest rate benchmark from 4.5% to 4%, a level not seen since 2005.
From a statement from the Bank of Guatemala:
The Monetary Board, based on a comprehensive analysis of the external and internal situation, after having heard of the Inflation Risks Balance, has decided to reduce the level of leading monetary policy interest rate from 4.50% to 4%.
Although the product has remained steady in its level of potential, the country's economic prospects are not as promising due to the weakening of economic fundamentals.
From a statement issued by the International Monetary Fund (IMF):
This note summarizes preliminary findings and recommendations of the IMF staff mission that visited Costa Rica during October 28–November 11 to conduct the 2014 Article IV consultation.
Increased borrowing costs, a disincentive to foreign investment and distrust of economic performance, are part of the expected scenario if public debt growth is not controlled.
Prensalibre.com reports that "... The draft budget for 2015 presented by the Ministry of Finance, amounting to $9.250 million (Q71 thousand 840.8 million), contemplates taking on new debt of about $2 billion (Q15 billion), of which $1.6 billion (Q12 thousand 334 million) came from bonds and loans. "
Considering the main internal and external variables stable, the Bank of Guatemala is keeping the leading policy rate, a major reference for interest rates in the country, unchanged.
From a statement issued by the Bank of Guatemala:
The Monetary Board, based on a comprehensive analysis of the external and internal situation, after having been made aware of the Balance Inflation Risks, has decided to keep the rate of the main monetary policy interest at 4.50% .
The Central Bank has cut its growth forecast for GDP for the year to 4% - 4.5% and expects inflation to be between 6.55% and 7.5%, higher than initially expected.
From the executive summary of the report "State of the Economy and Prospects, First Semester 2014":
At the end of the first half of the year, the Nicaraguan economy is maintaining positive growth rate, mainly driven by external demand and improved terms of trade.
A joint report by the Central Bank of Guatemala confirms the outlook for economic growth of between 3.3% and 3.9% for 2014.
From a summary of a report by the Banguat entitled "Economic Situation and Prospects of the country":
The world economy is recovering and the pace of growth has rebounded, particularly in advanced economies, emerging economies have weakened but are still explaining the dynamism on global growth; although downside risks are still present.
The trade, construction, financial and real estate sectors have remained the drivers of economic dynamism in the first three months of the year.
From a report entitled "Evolution of GDP in the first quarter of 2014," by the Comptroller General of the Republic of Panama:
The implementation of road infrastructure drove the rebound in the construction sector, where business grew by 16%, while the improved performance of retail and wholesale trade was due to an increase in consumption, which is particularly visible in the volume of sales of bulk food, beverages and tobacco, materials and equipment," while in the retail trade, the increase was 9.8%, due to a rise in sales of automobiles, pharmaceuticals and fuels in the country, among other things."
The Monetary Board, at its meeting on June 25, decided to lower the monetary policy leader rate from 4.75% to 4.50%
Among the arguments given by the authorities of the Central Bank of Guatemala were "... the behavior of the price of raw materials such as corn and wheat products which are holding a downward trend ... and the rising oil price."
On the domestic side the monetary authority said that "...
The new government in El Salvador is keeping almost the same ministerial team as the Funes administration, ensuring the continued deterioration of the economy and lack of eligibility for investment.
EDITORIAL
Unfortunately "dedollarization" has been ruled out by the elected President Sanchez Ceren, which, as the next president lamented, implies that "you cant resort to a monetary policy." Our opinion is -on the contrary- that formal dollarization in force in El Salvador is a barrier to greater government fiscal outrages.
The mission that visited the country is now recommending rationalizing public spending and developing a domestic bond market debt to improve the conditions of the financial system.
From a press Release issued by the International Monetary Fund (IMF ) :
"The International Monetary Fund (IMF) led by Przemek Gajdeczka visited Managua from 6 to 14 May 2014.
The progressive completion of major infrastructure works slowed down growth in 2013 to 8.4%, below what was achieved in the previous two years.
The Panamanian economy smoothly dodged the 2008 global crisis, and has maintained a high rate of activity through the implementation of public and private projects.
"The Central American country escaped the worst of the global recession, achieving an average growth rate of 8 percent in the past six years and scoring a double-digit growth in 2011 and 2012."
Economic activity showed an increase of 4.6% between January 2013 and January 2014, driven, among other things, by a boom in housebuilding.
Nicaragua's economy has been keeping pace with growth as reflected in the latest report by the Central Bank, in which the results of the economic activity in the last twelve months up to January 2014 have been collected.
The Central Bank has lowered its inflation forecast to 4% for 2014 and projects increases in interest rates in colones and dollars.
From a Communiqué from the Central Bank of Costa Rica:
The Board of the Central Bank of Costa Rica, in Article 4 of the 5633-2014 session of January 29, 2014 approved the 2014-15 macroeconomic program.
This program is intended to inform the public on the performance of key macroeconomic variables during 2013, as well as the goals, policy measures, assumptions and projections for the next two years, consistent with the priorities and subsidiaries assigned in Article 2 of the Organic Law (Law 7558).
During 2013 the Guatemalan economy continued to recover and show dynamism in most sectors in the country.
The Monetary Authority of Guatemala notes that in 2013 the country had a satisfactory rate of economic activity consistent with the recovery that has been seen in the world economy.
The entity predicts a robust 2014 with a strengthening of economic activity domestically, mainly driven by an acceleration in world trade, in which Guatemala is immersed.
The agency emphasized prudent management of the macroeconomic policy and stressed the need to focus efforts on reducing fiscal and external vulnerabilities.
From a communiqué by the International Monetary Fund:
"An mission from the International Monetary Fund (IMF) led by Przemek Gajdeczka visited Managua from 17th to 26th of September 2013 to conduct discussions in the context of Article IV.