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Regional economy: a slow year

Tuesday, July 30, 2013

Prospects for next year will likely improve, along with the economic health of the United States, the region’s main trade partner, as well as the European Union.

But growth in Central America will be slow this year - 4 percent for the region as a whole, down from 5 per cent in 2012, according to the most recent estimate of the UN Economic Commission for Latin America and the Caribbean.

For now, demand by the United States remains moderate, while many European economies continue to slump.

Among Latin American countries, the leader this year will be Paraguay, at 12.5 percent, although it remains to be seen if this level of growth is sustainable in a country with deep social divisions.

Panama will be second in Latin America and first in the region, with estimated growth of 7.5 percent, after reaching double digits in each of the last two years.

Nicaragua is expected to do as well as this year as last, with a 5 percent increase in output.

Meanwhile, numbers will be weak in the rest of Central America.

Growth will be only 3 percent in each of Guatemala and Honduras.

This is similar to each country’s increase last year.

Costa Rica’s economy will also grow by around 3 percent, according to the report.

But this is considerably lower than the 5.1 percent growth-rate, registered in 2012 over the previous year.

For its part, El Salvador is projected to grow by 2 percent his year, up from 1.6 percent last year.

Latin America’s major economic powers, Brazil and Mexico, will likewise grow slowly, with rates of 2.5 and 2.8 percent respectively, largely due to low commodity prices, while Colombia will maintain last year's growth rate of 4 percent.

Net importers of fuel and food, including Central America, will in turn benefit from low commodity costs.