After authorities suspended the start of Phase 2 on two occasions, the government of El Salvador announced that the second phase of the economic reopening plan would begin on August 20.
July 19 was the second time that the entry into force of this Phase was postponed, as it was initially planned to begin the second stage of the economic reopening process as of July 7, which contemplates the reactivation of the plastic, paper, cardboard and footwear industries, in addition to call centers, restaurants and public transportation.
In the context of the economic crisis, it is estimated that companies in Central America have reduced the working hours of employees to an average of 32 hours per week.
As a result of the spread of covid-19 in the countries of the region and the imposition of strict home quarantines, demand for products and services has fallen considerably in most markets.
President Nayib Bukele announced his decision to delay for a second time the start of Phase 2 of the Economic Reopening Plan, which was scheduled for July 21.
"After hearing the opinions of experts and, above all, the Ministry of Health, the governing body for health, and despite the fact that what our country needs is strict quarantine and not just complementary measures, I have decided to suspend Phase 2 of the economic reopening," Bukele explained on his Twitter account.
Arguing that the number of infections and deaths is increasing quickly because of the spread of covid-19, President Bukele decided to postpone the entry into force of the second phase until July 21.
Initially, the second phase of the economic reopening process was scheduled to begin on July 7, and would include the reactivation of the plastic, paper, cardboard and footwear industries, as well as call centers, restaurants and mass transportation.
Businessmen and authorities agreed that from June 16 will begin the reactivation of productive activities, and it is estimated that within 100 days the economy will be functioning at 100%.
After almost three months of restrictions to the mobility of people and the suspension of productive activities, derived from the outbreak of covid-19 in the country, agreements were reached at the Economic Reactivation Table.
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.
Structural changes in world trade, consumer preference for living on the outskirts of cities and a growing demand for technological equipment to be able to work from home are some of the turns economies will experience in the new reality.
Most companies globally have been focused on understanding the new business environment, which derives from the change in the ways people relate to each other as a result of the covid-19 outbreak.
In the context of the tense diplomatic and commercial relationship between the two world powers, Central American countries could have the opportunity to attract new investments, as it is estimated that some American companies would need to migrate their operations to the American continent.
As a result of the tension between the two nations, Mauricio Claver-Carone, an advisor to President Trump, believes that U.S. capital, which currently generates thousands of jobs in China, will turn south of the U.S. borders.
Discounts and offers, increase in the price level generally and the rise in operating costs due to new health and safety protocols are the main threats to the profitability of companies in this new commercial reality.
Given this context of economic and health crisis, which derives from the outbreak of covid-19 at the global level, Ariel Baños, a specialist in price management and founder of Fijaciondeprecios.com, explains what are the main threats that could affect the profitability levels of companies, and details some strategies that could be applied to mitigate the adverse effects.
Although the President of El Salvador seeks to maintain absolute quarantine, the Legislative Assembly of that country approved a law that establishes the measures that will be applied to gradually resume labor and economic activity, in both the public and private sectors.
The approval of this legal framework, which establishes four phases for the reactivation of the economy, takes place in the context of strong tensions between the Executive and the Legislative, who have had different criteria regarding the home quarantine, to which the population was subjected due to the outbreak of covid-19.
The Salvadoran business sector is calling for a reversal of the more rigid restriction measures implemented by the Bukele administration since May 7, arguing that the ban on public transport units has generated chaos.
When the local economy begins to return to normal, as isolation and mobility restrictions are relaxed, demand for health insurance is estimated to fall by 7%.
Using a demand/income sensitivity model developed by the Trade Intelligence Unit of CentralAmericaData, it is possible to project the variations in demand by Salvadoran households for different goods and services as the most critical phases of the spread of the covid-19 are overcome and the measures restricting mobility in the country are lifted.
Including the respective prevention protocols to avoid the spread of the virus, cinemas, beauty salons, auto parts sales, non-contact sports training centers, gyms and swimming schools will be able to open to the public as of May 1st in Costa Rica.
The protocols must be constructed between the institutions and the respective sectors, who may send their proposals to the Ministry or Executive Presidency as appropriate, reported the Ministry of Health.
Given the crisis in the region, businessmen in Guatemala report that smuggling of Mexican products has increased, while in Panama, beer producers attribute the rise in illegal trade in alcoholic beverages to the dry law.
With the spread of Covid-19, governments in Central America have decreed mandatory quarantines and have also restricted the movement of consumers at certain hours.
In order to redirect public resources due to the covid-19 outbreak, the government decided that investment projects that have not started to be implemented and those that are at an advanced stage will be suspended.
A letter signed by the Minister of Finance, Nelson Fuentes, and sent to the heads of state institutions, explains that the programs and projects contained in the Budget and Annual Public Investment Program Law (PAIP) are suspended.
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