Low growth of the local economy, low generation of formal jobs, deterioration of fiscal indicators derived from the rise in the deficit and public debt, are some of the factors that have been reported during 2018.
The Salvadoran Foundation for Economic and Social Development (Fusades) presented the Economic Situation Report up to November 2018, in which an analysis of the country's situation is presented.
During October, economic activity in Guatemala reported a 3.3% increase over the same month in 2017, mainly because of the performance of private services and wholesale and retail trade.
The Banco de Guatemala (Banguat) reported that the economic activity according to the IMAE estimation, in October 2018, showed a 3.3% growth rate (3.7% in October 2017).
In the first ten months of the year, the country received $1.226 million in remittances from abroad, an increase of almost 8% compared to the same period in 2017.
The Central Bank of Nicaragua (BCN) reported that remittances totaled US$128.9 million in October (US$118.5 million in October 2017), an 8.8 percent year-on-year variation.
Following the trend observed since May, in September the monthly index of economic activity in Nicaragua reported a 4.3% drop compared to the same month in 2017.
The Central Bank of Nicaragua reported that the Monthly Index of Economic Activity (IMAE) registered a 4.3 percent decrease compared to September 2017, with an annual variation of -0.2 percent and a 1.9 percent decrease in the accumulated variation.
From January to November 15th of this year, family remittances received from the Central American country totaled $4.265 million, 10% more than what was reported in the same period of 2017.
The most recent figures from the Central Bank of Honduras show that between January 1st and November 15th, 2017 and the same period this year, the flow of remittances sent to the country increased by $372.6 million, from $3,892.3 million to $4,264.9 million.
Justifying a larger-than-expected economic contraction, a growing fiscal deficit and a greater risk of internal and external financial constraints, the rating agency lowered the rating from B to B-.
This is Fitch Ratings' second downgrade so far this year. In the first quarter, the rating was B+ with a solid outlook, in the second quarter the rating agency downgraded it to B with a negative outlook, and now it downgraded it to B-, and kept the negative outlook.
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.
Following the IMF assessment, the country's macroeconomic conditions are expected to remain strong and growth is expected to be solid in coming years.
From the International Monetary Fund statement:
November 16th, 2018. An International Monetary Fund (IMF) team led by Esteban Vesperoni visited Tegucigalpa from November 12-16 to assess recent economic developments since the completion of the 2018 Article IV consultation in May and the medium-term outlook. At the end of the visit, Mr. Vesperoni issued the following statement:
Transport, electricity and trade were the sectors that contributed the most to the 4% year-on-year increase in economic activity up to September.
The General Comptroller reported that the Monthly Index of Economic Activity (IMAE) in the Republic, for January-September 2018, increased by 3.17% compared to the same period in 2017. The monthly yoy variation referred to September 2018 was 3.82% compared to its similar of the previous year.
In the first ten months of the year, the country received $4.504 million in family remittances, 9% more than what was reported in the same period of 2017.
From the statement of the Central Reserve Bank:
El Salvador received US$4.504.2 million in family remittances up to October 2018 with a growth of 9.1%, exceeding by US$375.3 million the income received under this concept in the same period of the previous year, informed the Central Reserve Bank. According to the CRB, only in October, US$464.9 million in remittances were received, contributing to the economy through the greater purchasing power of households that positively affects their consumption.
In September, economic activity in Costa Rica barely grew 2.5%, 0.3% over the previous month, mainly because of the effects of the activity stoppage caused by public employee unions.
The Central Bank of Costa Rica reported that the country's production, measured by the trend cycle series of the Monthly Economic Activity Index (IMAE), presented in September 2018 a year-on-year growth of 2.5%, which is 0.3 percentage points (p.p.) lower than the year-on-year growth of the previous month and 0.6 p.p. to September 2017.
Because of the economic activity reported in the financial sector and the manufacturing industry, during September the IMAE registered a variation of 4% with respect to the same month in 2017.
The original IMAE series, accumulated up to September 2018, shows that the national production of goods and services (in volume terms) increased 3.7% (5.4% in 2017), outcome observed in the last three months.
In the first ten months of the year, income from family remittances totaled $7.687 million, 13% higher than reported in the same period in 2017.
The latest data from the Bank of Guatemala show that in October 2018 the country received $864 million in remittances, 19% more than the $728 million registered in the same month in 2017.
The decline in economic activity is the reason for the year-on-year decline of 36% reported in the capital goods imports up to August this year.
According to figures from the Central Bank of Nicaragua (BCN), between August 2017 and the same month of this year, imports of capital goods registered a fall of 35.8%, declining from $107 million to $69 million.
The region is expected to conclude 2018 with a rise of just over 4% in the volume exported and just 3.6% in value, due to the fall in international prices of several agricultural products.
According to the International Trade Outlook for Latin America and the Caribbean 2018, published by the Economic Commission for Latin America and the Caribbean (ECLAC), it is expected that this year Central America will export larger volumes at lower prices.
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