At the end of last year, the Monthly Index of Economic Activity reported a -8.5% year-on-year variation, a drop that is explained by the negative effects generated by the outbreak of covid-19 and tropical storms Iota and Eta.
The national production of goods and services in terms of volume, showed a contraction in the accumulated variation rate of 8.5% (increase of 3.1% in 2019), mainly explained by the negative effects of the Covid-19 pandemic on economic activity and demand, added to the impact of tropical storms Eta and Iota on agricultural crops, some industries and productive infrastructure, mainly in the northern part of the country, says an official report.
As a result of the pandemic in May 2020, the IMAE hit bottom by falling 22% year-on-year, but from June onwards, smaller falls began to be reported and in October the decline was barely 1%; however, in November the country fell back by 12%.
National production, measured through the original series of the Monthly Index of Economic Activity (IMAE), reflected a 12% year-on-year decrease in November 2020, determined by the negative impact of the pandemic, to which was added the losses in production due to the flooding caused in the national territory in the first half of November by the occurrence of tropical storms Eta and Iota.
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%.
Although the end of the year holidays is a threat to Central America for a second wave of covid-19 infections, it is expected that total closures will not be decreed since there are currently effective health control options, and less costly for the economy.
When the first cases of covid-19 were reported in the region in March 2020, most governments decided to paralyze a large part of productive activities and decree home quarantines. These actions focused on containing the advance of the virus caused a severe economic crisis in all countries.
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.
After the IMAE in Honduras registered a -22% year-on-year variation in May of this year, during July and August the contraction of Honduran production was less, reporting falls of 13% and 8%, respectively.
The measures adopted to face the Covid-19 health emergency have had a negative impact on economic activity, reflected in the accumulated variation to August 2020 of the Monthly Index of Economic Activity (IMAE), which shows a 10% contraction in its original series, reported the Central Bank of Honduras (BCH).
The Council of Ministers approved that Tegucigalpa and San Pedro Sula will return from July 29 to Phase I of the Opening Plan, which allows companies to operate with 20% of their workforce.
According to the proposal put forward by the Multisectoral Table, commerce and companies in general were authorized so that as of Wednesday, July 29, they can resume their activities and business, according to the percentage of the workforce, as per the authorized region, using the biosecurity protocols approved by the Ministry of Labor and Social Security.
After suspending the process of reopening the economy, on July 27 the country will resume Phase I in Region 3, which provides for the reactivation of operations of companies with 20% of their workforceº
As a result of non-compliance with biosecurity protocols, the increase in the number of cases and the saturation of hospital capacity, Phase I of the Intelligent Opening Process was suspended.
On June 8, business activities began to restart. However, the increase in the number of people infected forced the authorities to back off and cancel the start of Phase I, a decision that was communicated on June 21.
Explained by the behavior of the Financial Intermediation, Insurance and Pension Funds, and the Manufacturing Industry, during January the Monthly Index of Economic Activity increased by 3.8% with respect to the same period in 2019.
Most of the productive activities showed positive results in the first month of 2020, standing out for their contribution to the global indicator: Financial Intermediation, Insurance and Pension Funds; Manufacturing Industry; Post and Telecoms; and Commerce, informed the Central Bank of Honduras.
During January in Honduras, the Economic Activity Confidence Index registered a slight increase of 9% compared to what was reported at the end of 2019.
Informants said that the main factors that could influence the behavior of inflation during 2020 are: the increase in fuel prices and its impact on electricity rates, as well as price increases in some food and certain raw materials, explains a report by the Central Bank of Honduras.
During November 2019, the IMAE registered a 2.6% year-on-year increase, largely because of the performance of Financial Intermediation and the Manufacturing Industry.
As of November 2019, the volumes produced of goods and services in the country registered a 2.6% increase, with respect to the same period in 2018 (3.7%), according to the original IMAE series; while the cycle trend series denotes a recovery for the second consecutive month, by growing 2.5% year-on-year (3.7% in 2018).
During December 2019 in Honduras, the Economic Activity Confidence Index registered a 33% decrease with respect to what was reported at the end of 2018.
Analysts said they expect that the slower evolution of the world economy and adverse weather conditions could continue to affect the growth of the Honduran economy, reported the Central Bank of Honduras.
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