New World Bank projections estimate that because of Nicaragua's political crisis, the country's GDP will fall 4% this year and 1% in 2019.
According to the expectations of the international organization, Nicaragua will be the only economy that will decrease in Central America, because of the political and social crisis in which the country is involved since last April, it is expected that the Gross Domestic Product (GDP) will decrease 3.8% in 2018 compared to 2017.
In Guatemala, the result of the Economic Activity Trust Index in September was the lowest of the whole year, and regarding the previous month it was reduced 25%.
The latest Economic Expectations Survey made by the Banco de Guatemala, forecasts an inflationary rate of 3.94% in September 3.91% in October and 4.01% in November 2018. Forecast the inflationary rate for December 2018 and 2019, the Panel expects an inflationary rate of 4.23% and 4.40%, in that order. In addition, for a horizon of 12 and 24 months (September 2019 and September 2020) the Panel forecasts an inflationary rate of 4.12% and of 4.32%, respectively.
Excessive regulation, increased tax charges and geopolitical uncertainty are the main risks to business growth in the region for Central American CEOs.
PricewaterhouseCoopers (PwC) conducted the Global CEO Survey in the Central American region, in which a group of business executives from Central American countries and the Dominican Republic shared their opinions about their economic expectations.
The Confidence Index in Economic Activity in Guatemala registered a year-on-year fall of 33% in July of this year and in August a 20% drop was registered, compared to the same period last year.
The most recent EconomicExpectations Survey prepared by Banco de Guatemala, forecasts an inflationary rhythm of 3.90% for August, 4.01% for September and 4.03% for October 2018.As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.07% and 4.22%, in that order.In addition, for a horizon of 12 and 24 months (August 2019 and August 2020) the Panel forecasts an inflationary rhythm of 4.07% and 4.33%, respectively.
For the fourth quarter of 2018, 10% of companies in the country expect to increase their payrolls, 85% do not foresee changes and 4% anticipate a reduction.
From a report by the ManpowerGroup :
Employers in five regions foresee an increase in their workforce during Q4 2018.Employers in Heredia report the strongest hiring intentions with a Net Employment Outlook of + 11%.On the other hand, employers in San José and Cartago report a moderate hiring activity with Trends of + 9%, while the Tendency for Alajuela is located at + 8%.Employers in Guanacaste anticipate a slight increase in their workforce with a Trend of + 4%, however, in Puntarenas & Limón, hiring levels are expected to fall, reporting a Trend of -3%
In the fourth quarter of the year, 16% of the business sector plans to hire more workers, mainly in the construction, agriculture and services sectors.
From a report by the ManpowerGroup:
Guatemalan employers report optimistic hiring plans for the next quarter, with 16% of employers expecting to increase their workforce, 3% foreseeing a decrease and 81% not anticipating changes, resulting in a Net Employment Outlook of + 13%.
Due to growth in demand for the fruit at an international and local level, Guatemalan producers see potential for expanding the crop in the coming years.
Since 2002 demand for the fruit in the US has doubled and in Europe it has grown 20% in the last three years, this has generated positive expectations for local producers who foresee business opportunities.
In the context of the difficult situation that Nicaragua is facing, the Ortega administration has announced its projections for agroindustrial production, consumption and trade for the period 2018 -2019.
From a statement issued by the Central Bank of Nicaragua:
In line with the trend seen since last year, in July 2018, the Confidence Index of Economic Activity in Guatemala fell by 33% with respect to the same month in 2017.
The latest EconomicExpectations Survey prepared by Banco de Guatemala forecasts an inflationary rhythm of 4.19% for July, 4.22% for August and 4.36% for September 2018.As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.45% and 4.43%, in that order.In addition, for a horizon of 12 and 24 months (July 2019 and July 2020), the Panel forecasts an inflationary rhythm of 4.26% and 4.36%, respectively.
Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.
The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.
Despite a decrease reported in the export of Honduran palm oil in the first months of the year, better results are anticipated for the second half of 2018, due to a higher than expected volume in the harvest.
According to figures from the Central Bank of Honduras, in the first four months of the year the country registered $54 million in exports of palm oil and its fractions, a figure that is 34% lower than the value reported in the same period in 2017.
Reinforcing the trend reported since last year, in June 2018, the Confidence Index of Economic Activity in Guatemala fell by 36% compared to the same month in 2017.
In the most recent Economic Expectations Survey conducted by the Banco de Guatemala,an inflationary rhythm of 4.25% for June, 4.24% for July and 4.37% for August 2018is forecast. As for December 2018 and 2019, the Panel foresees an inflationary rhythm of 4.47% for both years.In addition, for a horizon of 12 and 24 months (June 2019 and June 2020) the Panelforecasts an inflationary rhythm of 4.35% and 4.43%, respectively.
S & P has improved Panama's outlook from stable to positive, re-affirming its BBB risk rating based on factors such as "high and consistent economic growth and a stable fiscal policy".
The rating granted by Standard & Poor's recognized "... the progress made by Panama in recent years for the automatic exchange of tax information with 33 countries and changes in legal regulations to improve transparency in the financial system."
In the optimistic scenario, which foresees an end to the crisis in Nicaragua by the end of July, economic growth at the end of 2018 would be only 1.7%, with $400 million losses in added value.
The Nicaraguan Foundation for Economic and Social Development projects that a possible first scenario would be one where "...the government accepts an early exit negotiated and implemented no later than the end of July, thus achieving a framework of understanding focused on the issues of justice and democratization, putting an end to repression, violence and citizen insecurity."
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