The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.
After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.
According to IMF forecasts, Panama and El Salvador are the economies that in 2020 will report the worst falls in their production, while Guatemala would be the country in the region that would emerge best from this economic and health crisis.
Due to the severe economic crisis generated by the covid-19 outbreak, the economic growth projections calculated by international organizations are not at all encouraging for Central America.
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.
Because of factors such as business closures and lack of opportunities, it is estimated that criminal activity costs Honduras and El Salvador 16% of GDP, and in the case of Guatemala, its losses could amount to 7% of its production.
In Central America, the human costs of crime remain one of the highest in the world. El Salvador, Guatemala, and Honduras—referred to as the Northern Triangle— account for about four-and-a-half percent of homicides worldwide despite only having about one-half-percent of the world's population.
The Central Bank estimates that in 2020 economic growth will be 2.5%, which would exceed the 2.3% projected at the end of 2019.
The continuity in the application of public policies aimed at improving the environment for local consumption and investment, allows to foresee a slight rebound in the dynamics of production in 2020, with an estimated annual rate of 2.5%, reported the Central Bank (BCR).
In its latest update of economic growth projections for 2019, ECLAC estimates that the Dominican Republic will close the year with a 5% increase, followed by Panama, which would reach a growth rate of 3.7%.
According to economic growth projections for Latin America, which were estimated by the Economic Commission for Latin America (ECLAC) and updated in November, the Dominican Republic will be the country in the region that will increase its production the most this year.
After the economies of the region grew by 2.6% in 2018 as a whole, the IMF estimates that 2019 would close with a rise of 2.7% and could reach 3.4% by 2020.
The document "World Economic Outlook", prepared by the International Monetary Fund (IMF), states that for Panama the projected growth of the Gross Domestic Product (GDP) for 2019 was reduced from 5% to 4.3%.
Construction and financial services were the sectors that explained most of the 2% year-on-year growth of the country's Gross Domestic Product, reported in the second quarter of 2019.
From the demand perspective, economic growth came from the contribution of exports (2.02%), which improved its execution with respect to the first quarter. The impacts of the expansion of private consumption and gross capital formation were offset by the contribution of imports (1.42%) and the variation in stocks (1.2%), reported the Central Reserve Bank (BCR).
Financial and insurance activities and trade and vehicle repair were the sectors that explained most of the 1.8% year-on-year growth of the country's Gross Domestic Product, reported in the first quarter of 2019.
Compared to the same period last year, the quarterly results show a reduction in the growth rate, as a reflection of a lower dynamism of exports of goods, added to reductions in the expectations of world economic growth and the main trading partners, explains the Central Reserve Bank of El Salvador (BCR).
For the IDB, investment in infrastructure is the most important priority when increasing the probability of improving productivity and reaching higher per capita income levels in the countries of the region.
The Inter-American Development Bank (IDB) published its report "Building Opportunities for Growth in a Challenging World," in which it addresses the benefits of infrastructure investment and its influence on productivity growth in the countries of the region.
Guatemala and El Salvador are the Central American economies that have registered the lowest levels of economic growth, when this is associated with the size of their public sector.
Panama, Nicaragua, Honduras and Costa Rica are the countries that would be obtaining exceptional results in their economic growth from the average expenditure of the region during 2011 to 2018, which could be associated with the investment made in past periods, informed the Central American Institute of Fiscal Studies (Icefi).
Construction and mining activities explained part of the 2.5% year-on-year increase in Gross Domestic Product last year.
El Salvador recorded a growth rate in 2018, based on the expansion of consumption and investment, according to the first estimates of the Central Reserve Bank (BCR), which implies a growth two tenths higher than that reported in 2017, reported the institution.
Higher domestic demand and increased investment are the factors that will influence the 3.3% growth forecast for the regional economy next year.
According to forecasts by the Economic Commission for Latin America and the Caribbean (ECLAC), in 2019 Panama will be the economy with the highest growth in Central America, with an expected rate of 5.6%.
It would be followed by Honduras, with expected 3.6% GDP growth, Guatemala with 3%, Costa Rica with 2.9% and El Salvador, with an increase of 2.4%. Only in Nicaragua is the economy expected to decline. According to ECLAC, GDP will fall by 2%.
Explained mainly by the private consumption expansion, the Gross Domestic Product reported a year-on-year increase of 3% in the first half of the year.
Regarding growth in the second quarter of the year, the Central Reserve Bank (BCR) reported that the production process informed between April and June this year confirms the greatest boom in economic activity announced during the first quarter, so it increased by one-tenth the growth projection for 2018, with an expected rate of 2.6%.
Explained by the performance of private consumption and gross investment, during the first three months of the year the Gross Domestic Product registered an increase of 3.4%.
The Central Reserve Bank reported that "... During the first quarter of the year, the Salvadoran economy grew at a rate of 3.4% due to a significant boost in domestic demand favored by higher private consumption and gross investment, while external demand benefited from thegood performance of the global economy, mainly from the United States and the region's main trading partners."
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