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.
During 2020 in all countries of the region, construction activity decreased considerably and Central American cement imports stagnated, this adverse scenario is explained by the economic crisis generated by the pandemic.
The construction industry statistics system, which is part of the interactive platform "Construction in Central America" of CentralAmericaData's Business Intelligence area, compiles the most important industry data for each of the countries in the region.
Twelve months after Central America began a health and economic crisis triggered by the covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.
In March 2020, the first cases of covid-19 began to be detected in the countries of the region. The highly contagious disease, which at that time had already claimed the lives of thousands of people around the world, forced Central American governments to establish mobility restrictions.
The World Bank has improved economic growth projections for all Central American economies for 2021, with Honduras, El Salvador and Panama having the most promising forecasts.
In June 2020, when the health and economic effects of the pandemic that caused the covid-19 outbreak were beginning to be reported, the World Bank predicted that in 2021 Nicaragua's Gross Domestic Product would decrease by -1.6%, but in a January 2021 publication it projected that the drop would be -0.9%.
Because of the fall in economic activity and the restrictions imposed to contain the spread of covid-19, businessmen in Costa Rica and Panama predict that the process of economic recovery will not be completed in the near future.
In this crisis scenario generated by the covid-19 outbreak, the Costa Rican economy does not show clear signs of recovery, since during November 2020 the Monthly Index of Economic Activity reported a year-on-year fall of 6.2%, a decline similar to that reported in October, when it was 6.3%.
As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.
Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19. The strict quarantines decreed, the closure of borders and commercial establishments, ended up damaging the dynamism of productive activities.
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.
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.
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%.
At a time of economic slowdown, companies must immediately review business models and identify opportunities arising from the creation of new market niches.
In Central America, during the first half of the year, at least four of the six economies reported declines in productive activity. The most dramatic case is that of Nicaragua, which in February recorded a 7% year-on-year drop in the Monthly Index of Economic Activity (MIEA), a situation reported since the political crisis began in April 2018.
Figures from Funde detail that last year FDI totaled $445 million, and in March 2018 economic activity grew by 2%.
The National Development Foundation (Funde) presented the results of the report "Economic and fiscal situation 4th year of the administration 2014-2019", and among the main conclusions of the study is that "...El Salvador remains behind as a recipient of resources Direct Foreign Investment in Central America, even though Guatemala and Nicaragua had falls in net inflows in 2017."
CentralAmericaData's Central American Economic Activity Index registered interannual growth of 3.8% up to September.
Figures from the Information System Central American Macroeconomic Monitoring, by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with the graphic"]
The Central American Economic Activity Index, prepared by CentralAmericaData, recorded a year-on-year growth of 3.4% as of August.
Figures from the Information System Central American Macroeconomic Monitoring by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption="Clic para interactuar con la gráfica"]
The monthly index of economic activity in the region, compiled by CentralAmericaData, registered a year-on-year growth of 3% in April.
Figures from the Information System ´Central American Macroeconomic Monitoring´ by the Business Intelligence Unit at CentralAmerica Data: [Figure caption = "Click to interact with the graphic"]