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.
Nicaraguan businessmen believe that electoral reform is essential to reactivate the country's economic activity, which has been in decline since the crisis erupted in 2018.
According to estimates by the International Monetary Fund (IMF), Nicaragua's Gross Domestic Product contracted by 5.7% in 2019, a drop that complements the year-on-year variation of -3.8% recorded in 2018.
After production in Nicaragua fell 3.8% in 2018, the IMF estimates that during 2019 the GDP will contract by 5.7%, however, the agency predicts that by 2020 the variation could be only -1.2%.
Real GDP is estimated to have contracted by another 5.7% in 2019 due to the deterioration in aggregate demand, fiscal consolidation and sanctions, the IMF reported after its visit to the country.
"Growth remains susceptible to adverse shocks to global growth, economic and socio-political stress in Nicaragua, the continued weakness in consumer and business confidence, and uncertainty regarding the implementation of the fiscal reform.”
After the slowdown in growth between 2017 and early 2019, the economy has recovered since mid-2019, as a result of a rebound in services, agriculture and manufacturing, which produced an estimated 2.1% growth in 2019, reported the International Monetary Fund (IMF).
In Panama the government estimates that in 2020 the economy will grow between 4% and 4.5%, a rise that would be determined by the behavior of construction, tourism and exports.
According to estimates from the Ministry of Economy and Finance (MEF), by the end of 2019 the increase in the Gross Domestic Product (GDP) could fluctuate between 3% and 3.5%, while by the present year 2020 it will be between 4% and 4.5%.
According to the IMF, Honduras has experienced a moderation in economic growth in recent quarters, but a recovery is expected next year.
Honduras has made significant progress in implementing its economic program, which aims to foster inclusive growth through prudent macroeconomic policies and structural and governance reforms, according to the international organization's report.
Because of the weakening of the construction and services sectors, the IMF reduced the economic growth projection for Panama from 6% to 5% this year, forecasting a "slow recovery.
The fundamental aspects of the Panamanian economy remain solid, and is expected to recover and next year reach its potential growth of 5.25%, with inflation approaching 2% in the medium term, explained the international agency.
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.
Reducing the income tax exemption threshold for individuals, increasing property taxes and raising VAT from 13% to 15% is part of the institution's proposal, arguing that in the country "the tax/GDP ratio is relatively low."
In the medium term, the positive effects on confidence and progress of structural reforms, including those related to OECD membership, should reduce risk premia and stimulate investment, boosting growth to 3.25%, reported the International Monetary Fund (IMF).
Because the economy is on the road to rebound after a temporary slowdown, the entity forecasts that in 2019 will register a 6% increase and not 6.3%, as initially planned.
Panama's economic fundamentals remain strong. The economy is on the road to rebounding from the temporary slowdown and will be gradually converging to its potential growth of 5.5% in the medium term, explains the IMF after its last visit to the country.
According to the international organization, the Panamanian economy will grow 6.3% this year, boosted by the recovery of the construction sector and the start-up of operations of a large mining project.
In the words of the International Monetary Fund (IMF), the Central American country's economy is projected to remain among the most dynamic on the continent, as the outlook remains positive.
Excluding Nicaragua, the economies of Central American countries are projected to increase 2%, however, for the business sector some of the expectations may be too optimistic.
The 5.6% growth estimate for Panama is too optimistic for the private sector, as no major changes are expected compared to 2018.
The president of the National Council of Private Enterprise, Severo Sousa, explained to Panamaamerica.com.pa that "...
The Bank of Guatemala expects next year's economic growth to be better than in 2018, which would be caused by higher public spending and the growth of family remittances.
Authorities of the Bank of Guatemala (Banguat) informed that the Guatemalan economy will close 2018 with a nearly 3% growth, however, for next year is expected that the increase in GDP will be in the range between 3% and 3.8%.
According to the IMF, in the first half of the year, the Salvadoran economy increased above the estimated potential, the inflation remained low and the fiscal position was better than expected.
From the International Monetary Fund statement:
An International Monetary Fund (IMF) team, led by Ms. Alina Carare, visited San Salvador from November 12 to 16, 2018 to discuss recent economic and financial developments.