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Central America faces unprecedented challenges

Tuesday, November 13, 2018

Emigration has for the past two decades been part of the economic program of El Salvador, Guatemala and Honduras, where remittances from citizens working abroad account for some 15% of GDP in each country.

At the same time, migrant "caravans" seeking refuge in the United States dramatize the failure of the three countries to offer employment and security.

In Nicaragua, opposition to the Sandinista government led by President Daniel Ortega has metamorphosed into open insurrection, with a significant impact on the local economy, including an expectation this year of at least 4 percent negative growth.

Costa Rica, for many years seen as a beacon of stability, is running out of money, as public-sector unions refuse to accept any cutbacks in benefits, a main reason for the government’s chronic deficits, including a projected shortfall next year of 7% of GDP.

Meanwhile, Panama is seeing a slowdown in the rate of economic growth, while social problems persist, including a degree of income inequality which – tied with Brazil and Colombia – is the highest in Latin America.