The pessimism expressed by consumers in Costa Rica and the constant deterioration of business expectations in Guatemala reflect part of the complex challenges faced by Central American economies this year.
A report prepared by the School of Statistics of the University of Costa Rica (UCR) shows the negative trend that come showing the economic expectations, because between February 2018 and the same month of 2019, the Consumer Confidence Index (ICC) fell 15%.
After December 2018, the Confidence in Economic Activity Index in Guatemala reported an 8% year-on-year increase, in January the variation was -3% regarding the same month in 2017.
The Bank of Guatemala Report summarizes that "... An inflationary rhythm of 3.34% is forecast for January, 3.47% for February and 3.56% for March 2019. Regarding December 2019 and 2020, the Panel foresees an inflationary rhythm of 3.95% and 4.19%, in that order.
In December 2018, the Confidence in Economic Activity Index in Guatemala reported a 14% increase regarding November, and in relation to the same month in 2017 it increased 8%.
The Banco de Guatemala informed that in the last Economic Expectations Survey an inflationary rhythm of 4.01% is forecast for December 2018. It foresees 3.93% for January 3.96% for February and 4.24% for December.
In November, the Confidence Index of Economic Activity in Guatemala reported an 8% increase regarding the previous month, and regarding the same month in 2017 increased 5%.
Banco de Guatemala informed that, in the last Economic Expectations Survey, an inflationary rhythm of 4.31% and 4.38% is forecast for November and December 2018, respectively, as well as 4.23% for January 2019.
In October, the Confidence Index of Economic Activity in Guatemala reported an increase of 11% regarding September of this year and increased 41% compared to the same month in 2017.
The most recent Survey of Economic Expectations made by the Banco de Guatemala, predicts an inflationary rate of 4.39% in October 4.17% in November and 4.18% in December 2018.
Partly explained by the decline in business confidence, the International Monetary Fund expects Costa Rica's economy to grow 3.3% each year in 2018 and 2019.
The uncertainty in the economy is mainly due to the government's growing debt and fiscal deficit, as well as doubts about the future of the tax reform that was already approved in the first debate by the Legislative Assembly, but now awaits the approval of the Constitutional Chamber.
In Guatemala, the result of the Economic Activity Trust Index in September was the lowest of the whole year, and regarding the previous month it was reduced 25%.
The latest Economic Expectations Survey made by the Banco de Guatemala, forecasts an inflationary rate of 3.94% in September 3.91% in October and 4.01% in November 2018. Forecast the inflationary rate for December 2018 and 2019, the Panel expects an inflationary rate of 4.23% and 4.40%, in that order. In addition, for a horizon of 12 and 24 months (September 2019 and September 2020) the Panel forecasts an inflationary rate of 4.12% and of 4.32%, respectively.
The Confidence Index in Economic Activity in Guatemala registered a year-on-year fall of 33% in July of this year and in August a 20% drop was registered, compared to the same period last year.
The most recent Economic Expectations Survey prepared by Banco de Guatemala, forecasts an inflationary rhythm of 3.90% for August, 4.01% for September and 4.03% for October 2018.As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.07% and 4.22%, in that order.In addition, for a horizon of 12 and 24 months (August 2019 and August 2020) the Panel forecasts an inflationary rhythm of 4.07% and 4.33%, respectively.
In Costa Rica, the private sector is recommending that the Alvarado administration implement effective measures to reactivate the national economy and a plan to recover the country's competitiveness.
Entrepreneurs are not very optimistic about the development of their businesses in the coming months, since when comparing the business confidence indicator of today (6.2) with that of a year ago (6.4) it can be seen that it is at the same level as twelve months ago.
Citizen insecurity, political uncertainty and low levels of investment are the main factors that are still affecting the quality of life of the population and the business climate in El Salvador.
Analysis undertaken by the Salvadoran Foundation for Development (Fusades) points out the main factors that are preventing the Salvadoran economy from achieving better levels of growth.In its Legal and Institutional Report, it notes recent advances in trade facilitation, but points out that public insecurity continues to be the factor that most negatively affects the quality of life of the population and the investment climate.
In line with the trend seen since last year, in July 2018, the Confidence Index of Economic Activity in Guatemala fell by 33% with respect to the same month in 2017.
The latest Economic Expectations Survey prepared by Banco de Guatemala forecasts an inflationary rhythm of 4.19% for July, 4.22% for August and 4.36% for September 2018.As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.45% and 4.43%, in that order.In addition, for a horizon of 12 and 24 months (July 2019 and July 2020), the Panel forecasts an inflationary rhythm of 4.26% and 4.36%, respectively.
Reinforcing the trend reported since last year, in June 2018, the Confidence Index of Economic Activity in Guatemala fell by 36% compared to the same month in 2017.
In the most recent Economic Expectations Survey conducted by the Banco de Guatemala,an inflationary rhythm of 4.25% for June, 4.24% for July and 4.37% for August 2018is forecast. As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.47% for both years.In addition, for a horizon of 12 and 24 months (June 2019 and June 2020) the Panelforecasts an inflationary rhythm of 4.35% and 4.43%, respectively.
The private sector is demanding that uncertainty be avoided in public procurement processes of national interest, as it only causes international investors to have doubts, affecting the country's legal security.
The Cciap states that "... international public tenders allow for the evaluation of the legal security of a specific place, as they show its performance in terms of transparency, administrative seriousness and institutional strengths."
In line with the decreasing trend that has been reported since last year, in May 2018, the Confidence Index of Economic Activity in Guatemala fell by 42% compared to the same month in 2017.
According to a survey carried out by Banco deGuatemala, an inflationary rhythm of 4.09% is forecast for May, 4.12% for June and 4.09% for July 2018. Regarding expectations for the end of the year, the consulted businessmen expect December to close with inflation of 4.50%.In addition, for a horizon of 12 and 24 months (May 2019 and May 2020), the Panel forecasts an inflationary rhythm of 4.31% and 4.48%, respectively.
In Costa Rica, between the first and second quarters of the year, expectations of business leaders fell by 4%, registering the lowest value in the last eight years.
The Research Institute of Economic Sciences at the University of Costa Rica reported that "... The result of the global index of business expectations reveals in general terms that the optimism of business leaders weakened by 2.3 percentage points compared to the previous quarter, standing at 51.3 ...".