After the unemployment rate in the United States fell from 15% to 8% between April and August, it became evident that at the beginning of the crisis the capacity of recovery that the North American country could develop was underestimated and it is expected that this behavior could boost the economic activity in Central America.
During the first half of 2020, when the first cases of covid-19 began to be reported in the region, forecasts noted that the recovery of economic activity would be excessively slow, due to a significant drop in consumption globally.
The World Bank projects that the Central American economy will contract by 3.6% this year, due to restrictions on movement, a decline in remittances and tourism, and a drop in agricultural prices.
The sudden and widespread impact of the coronavirus pandemic and the measures taken to contain it have caused a drastic contraction in the global economy, which, according to World Bank forecasts, will shrink by 5.2% this year, the bank reported on June 8.
The outlook for some economies in the region for 2019 is not the best: in Nicaragua GDP is expected to fall between 5% and 7%, while in Costa Rica the growth estimate at the end of the year was reduced from 3.2% to 2.2%.
The estimates of the Nicaraguan Foundation for Economic and Social Development (Funides), presented in its "Informe de Coyuntura - Julio 2019", indicate that by 2019 an economic contraction of between 5.4% and 6.8% will be reported in the country.
The region is expected to conclude 2018 with a rise of just over 4% in the volume exported and just 3.6% in value, due to the fall in international prices of several agricultural products.
According to the International Trade Outlook for Latin America and the Caribbean 2018, published by the Economic Commission for Latin America and the Caribbean (ECLAC), it is expected that this year Central America will export larger volumes at lower prices.
"The ongoing economic recovery in the United States and persistence of relatively low oil prices will provide favorable tailwinds to the region.Because of supply constraints, the region is expected to maintain a moderate pace of growth in coming years."
From the press release by IMF:
Central bank governors, finance ministers, and banking superintendents of Central America, Panama, and the Dominican Republic, and senior IMF officials met in El Salvador on July 23-24 to review the economic outlook for the region and strategies to strengthen policy frameworks and raise inclusive growth. The regional conference saw the participation of the President of El Salvador, Salvador Sánchez-Cerén; Governor of the Bank of México, Agustín Carstens; Director of the Netherlands Bureau of Economic Policy Analysis, Laura van Geest; and former Finance Minister of Perú, Luis Carranza.
Authorities from the Central American countries will discuss with the IMF the outlook for the coming years.
Two years after the international financial crisis significantly affect the economies of Central America, the authorities of the isthmus nations are meeting to discuss progress of the fiscal and economic reforms that have been implemented.
An article in Infolatam.com reports: "regional monetary authorities and the IMF will discuss progress in rebuilding fiscal space and ensure debt sustainability, the strength of the financial, regulation and supervision systems and prudential framework, and the interaction between structural reforms and economic growth, among other issues, according to the official program.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.