Gradual increase in exchange rate flexibility, supported by fiscal consolidation, wage moderation, and a prudent monetary policy.
On July 12, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Honduras.
Background
Even though a benign external environment, spikes in foreign direct investment and remittances inflows, and substantial debt relief contributed to episodes of high growth in Honduras over the past decade, the country remains one of the poorest countries in Central America with limited progress in establishing conditions for sustained long-term growth. In part, these outturns may be explained by the fact that many successful economic reforms undertaken in the first half of the 2000s, which justified the completion of the Highly Indebted Poor Countries and Multilateral Debt Relief Initiative programs by the international community, were abandoned or even reversed in the latter part of the decade.
The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions.
A Policy-Driven, Multispeed Recovery
Following the deepest global downturn in recent history, economic growth solidified and broadened to advanced economies in the second half of 2009. In 2010, world output is expected to rise by 4 percent.
The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions.
A Policy-Driven, Multispeed Recovery
Following the deepest global downturn in recent history, economic growth solidified and broadened to advanced economies in the second half of 2009. In 2010, world output is expected to rise by 4 percent.
The insurance industry kept on growing, albeit at a lower pace, in spite of economic and financial crisis.
In 2008 this industry sold 17% more insurance than in 2007, summing over $3 billion sales. It slowed considerably in 2009, but managed to maintain positive growth numbers.
From Martesfinanciero.com: "In order to achieve this, insurers had to resort to diverse measures, such as strategic alliances, brand changes, better prices and more services".
Central American tourism was brought to its knees by the economic crisis and the A H1N1 virus, and is having a rough time getting back on feet.
All the countries of the region have suffered with less tourists and less revenue, in addition to lower quality tourists with reduced purchasing power. Visitors stay for less time than before, and spend less per capita and per day.
Paying maximum attention to the "Three C's" is always important. In times of crisis it is vital...
Economic turbulence disrupts the stability of cash flows, which are sometimes also affected by external factors such as exchange rates, interest rates, reduction of credit, etc. This is why we must pay extreme attention to managing our cash flow.
A exhaustive revision of all product lines, along with their respective profitability, is a good tactic to stay afloat while waiting for better times.
Fitch Ratings issued a special report: "Central American Banking: Evolution of the Crisis and Learnt Lessons".
In Fitch's opinion, the negative impact the international crisis had on Central American banks was very evident in 2009. The current economic context poses growing risks for the sector, as well as an important challenge for this year.
"Banking systems of the region have witnessed a sensible reduction in their cumulative results in the first half of the year, mainly caused by a considerable increase in delinquent loan reserves", states the report. "These results will continue under pressure in the following months, and their potential bounce-back will depend on an improvement of the economic environment, which Fitch does not expect before 2010".
The country's current economic paralysis causes an average loss of $27 million (400 million lempiras) each day.
This was stated by Benjamín Bográn, Industry and Commerce Secretary (SIC), adding that the most affected are micro, small and medium companies.
From Elheraldo.hn: "Regarding fuel supply, importing companies from the Honduran Council of the Petroleum Industry assured it will be business as usual, despite political developments".
Truism: management practices for businesses during times of crisis cannot be the same as those used during boom times.
Even though Panama appears to be doing a better job of dealing with the global crisis compared to other countries in the region, signs of a slowdown are clear. Commercial activity has decreased nearly 10% in the first quarter of 2009.
The economic crisis reveals the true reasons for businesses to practice corporate social responsibility.
"An intelligent business does not opt for the ethics of disinterest, an impossible thing for any modern business, but one of common interest. It does not mean abandoning the search for benefit or viability, but rather it means trying to achieve return through shared benefits.
Even during a recession, there are many intelligent management strategies that are applicable to improve business competitiveness.
Times of crisis represent an excellent period in which to refocus on what our businesses do best, attract new clients, and build for the future.
Melanie Warner analyzes this theme in an article in Bnet, detailing four fundamental steps to carry out intelligent business moves, overcoming bad times and, even, growing.
Although in these hard times the general tendency is to cut expenses in technology, investing intelligently in technology can be the solution.
Owners and intelligent managers are seeking information technologies and communications that aid their businesses´ need to connect to clients and improve client interactions so as to increase income and, fundamentally, reduce costs.
The objective is to reduce costs wherever possible, while avoiding giving customers reduced service or product quality.
Cuts in spending affect products or services in different ways. Cuts in administration, for example, are not normally noticed by buyers, but staff cuts in areas that are visible such as customer service or the quality of the packaging may adversely affect the customers’ experience.
Will the “satisfaction equation” or the desire for development and ambition during good times change to a greater appreciation of stability and relationships in the long term?
Paula T. Leñero, Human Capital Manager at Deloitte Costa Rica, analyzed the possible changes in the definition of job satisfaction in times of crisis.
"During normal times, it is usual for job security perception, as an element of satisfaction, to be overcome by other needs such as professional development or fair compensation. However, in times like those that lie ahead, stability will be an element of high valuation, more so than other needs. It is important to explore whether this regression of the satisfaction equation" that has occurred in previous generations will affect current and future generations, and in the same manner. That is: Will we have more young people who value stability and long-term relationships over other aspects of satisfaction?"
A regional industry at risk: You can now add the reduction of US imports to the elimination of the Multi-fiber Agreement of a few years ago.
The apparel maquila is confronting a new challenge. The US recession has caused a contraction in clothing sales and hence a reduction in imports. Asian, Latin American, African and other regional producers are already embroiled in a fierce competition for the US market.
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