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Reacting to the U.S. and EU

Tuesday, August 30, 2011

Dark clouds may be gathering on the economies of the United States and Europe, Central America’s biggest markets, with inevitable impact on the region.

Before the latest turmoil in the U.S. and European stock exchanges, the World Bank expected regional growth of 4 to 5 per cent this year and in 2012. 

Now, it anticipates 3 per cent. Still, this is far from catastrophic. In addition, circumstances in various sectors are different from the last crisis, in 2008.

At the time, the region’s textile and clothing maquiladoras suffered significant losses. However, wages of Chinese workers have risen significantly since then, partly due to the increase in the value of the yuan.

In terms of manpower, Central America has the opportunity to gain ground in its competition with China. In addition, a slowdown should spur greater investment in infrastructure, including roads and ports, as well as administrative systems, such as simplification of customs formalities, so that the region can operate more efficiently, once the economy revives.