Indicators show a loss of dynamism in the Costa Rican economy, which fell from a year on year growth of 7.2% in February, to 2.39% in October.
The editorial in Nacion.com notes the risks posed for next year, 2013, for Costa Rica's economy, if the symptoms which have been noticed deepen, either because of global economic vicissitudes, or from lack response from the government or private economic participants.
The constant deceleration of the Volume Index of Economic Activity (IVAE in Spanish), is a clear sign that the country's economy could end 2012 in recession.
Data reported by the Central Reserve Bank (BCR) up until August indicates that the IVAE that only grew by 0.7% compared to 3.4% reported in the same period of 2011.
"The Volume Index of Economic Activity (IVAE), calculated each month by the Central Reserve Bank (BCR), reveals the trend of the country's economy over a short period of time.
According to the BCR, 2012 closed with economic growth of between 1.3% and 1.6%, having been affected by the bad international situation and domestic problems.
Carlos Acevedo, president of the Central Reserve Bank of El Salvador, spoke with the newspaper La Prensa Grafica on the prospects for economic growth in the country.
As of July 2012 the Monthly Economic Activity Index is 4.5%, confirming a slowdown that began five months ago.
An article in Elfinancierocr.com reports that "This is a significant drop since last June as it was thought that the economy would advance at a rate of 5.3%. With the July data the national economic has been slowing down for the last five months, and in March a decline started in the dynamism that had been driven by the manufacturing sector. Increased activity was recorded in February when there was a figure of 7.43% in the variation of the interannual Imae. "
The Central Reserve Bank has adjusted to 1.3% - 1.5% its forecast for growth of the Salvadoran economy for 2012, from the 2% - 2.5% previously expected.
The causes of the slowdown are the sluggish economy of the United States, and the crisis in Europe.
An article in Elmundo.com.sv reports that "This is compounded by the effects that are occuring in agriculture especially the drought in the east" of El Salvador.
The first six months of 2012 reflect poor growth levels of 1%, below the already meager 1.6% projected by the government.
From the Salvadoran Association of Industrialists (ASI):
The Salvadoran Association of Industries (ASI) presented the balance of the Salvadoran economy during the first six months of the year, demonstrating that El Salvador is the country with the lowest economic growth and the only clear decrease in the region.
The Salvadoran Foundation for Economic and Social Development (FUSADES) has published a Situation Report for October-December 2011.
Fusades’ statement reads:
2011 was characterized by a weakening of global growth and for 2012 global growth expectations are even lower. In this environment, economic growth in El Salvador remains weak, with a negative outlook for the investment climate and low growth prospects.
The country's economy, which has not yet recovered from the crisis of 2008, will suffer from a deficit for which the government can not find effective solutions.
The unbridled growth of government spending in recent years, growth which has only just been moderated, has brought the fiscal deficit to 5% of GDP annually. The proposed tax reform that President Chinchilla presented to the Costa Rican Assembly is not only a legal and political quagmire, but if approved, would not solve the problem of the public deficit, because of the cuts made to the original project.
Industry, trade and agriculture, which together make up half the country's GDP, are showing signs of slow-down, which in turn will impact growth targets for 2011 and 2012.
Costa Rica's economic activity indicator for August displayed an increase of 4.2% for trade, lower than in previous months. Since last May, Industry growth has been stagnant at 3.5% relative to 2010, while the agricultural sector has started to fall.
The slowdown in the economy, tax reforms and devaluation of the colon against the U.S. dollar are making the sector uncompetitive.
Since last July, the sector's productivity rates have been down, a situation causing concern to producers.
According to an article in Elfinancierocr.com, "The Executive is preparing for a storm if the global economic environment remains turbulent, because most of the national agricultural production goes abroad.
In Costa Rica, this niche market was hit hardest by the U.S. housing crisis.
According to the Costa Rican Chamber of Construction the outlook is not encouraging and they do no foresee recovery in the short term.
Jose Alfredo Sanchez, vice president of the group, said "In Costa Rica, there has been a dramatic effect on the coast, where (project development) has not recovered in the short term because this would require strong economic growth in the U.S., which is not happening. "
They note that the private sector is bearing the brunt of the economy while the government is negligent in implementing development plans that have already been approved by several laws in the Legislature.
A statement by the Salvadoran Association of Industrialists (ASI) reads:
The Salvadoran Association of Industrialists (ASI) has made an assessment on the performance of the manufacturing industry, which details the results of the different productive sectors.
Economic recovery appears to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to new analysis from the OECD.
Growth remains strong in most emerging economies, albeit at a more moderate pace.
Economic recovery appears to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to new analysis from the OECD. Growth remains strong in most emerging economies, albeit at a more moderate pace.
Economics, like politics, echoes and reflects the culture and values prevailing in each society.
There are a number of European countries facing serious financial difficulties as a result of the mismanagement of public finances. The situation is serious, and the globalization of financial markets threatens to spread these difficulties worldwide.
When assigning responsibility for what is happening, the answers are as varied as the interests at stake, especially from the political point of view. Technical reasons are emphasized, and white boards are filled with numbers and equations that attempt to explain the situation and how it was arrived at.
The variation of IMAE in September was 3.08%, highlighting the slowdown trend observed since February.
February was the month which recorded the highest figure of the year: 6.30%.
However, this indicator has been declining significantly and is converging to the values observed (3.08%) since June of this year, indicating a significant stabilization.