Economic Snapshot for Central America
December 4, 2019
Growth is seen slowing slightly next year as a loss of momentum in the Dominican Republic and Puerto Rico will outweigh faster growth in Costa Rica and Panama. Downside risks stem from potential social unrest—particularly in Haiti, Honduras and Nicaragua—and a vulnerability to natural disasters.
Central America Monetary & Financial Sector News
Regional inflation was stable at 1.8% in October. Lower inflation in Costa Rica and Honduras was offset by higher price pressures in the Dominican Republic and Guatemala. Inflation is seen rising somewhat next year on accommodative monetary stances and currency depreciation. Volatile oil prices remain a key risk to the outlook.
All was quiet on the monetary policy front in recent weeks, with central banks staying put. Regional interest rates are seen staying fairly steady next year, following a spate of rate cuts in 2019 to bolster economic activity against a mild inflation backdrop and looser monetary policy by the Federal Reserve.
Over the last month, the Costa Rican colón and Guatemalan quetzal appreciated on encouraging economic activity data, while the Dominican peso lost some ground. Going forward, most currencies should depreciate due to a mixture of persistent fiscal and current account deficits, and political instability in some countries.
5 years of Central America economic forecasts for more than 30 economic indicators.
Central America Economic News
December 10, 2019
Consumer prices rose 0.44% month-on-month in November, down from the 0.70% increase in October.
December 4, 2019
Remittances from workers abroad rose 8.3% year-on-year in November, down from the 15.8% expansion recorded in October.
November 30, 2019
The economy expanded 5.2% in October according to Central bank data, up slightly from September’s 5.1% growth. While a breakdown by sectors is unavailable, the Central Bank’s recent monetary easing—in the form of 100 basis points of rate cuts since June and a DOP 34 billion liquidity injection—supported credit provision and was likely an important driver behind October’s reading. Looking ahead, monetary stimulus measures should continue to feed through to the economy in coming months, aiding consumption and investment.
November 29, 2019
At its 29 November monetary policy meeting, the Central Bank (BCRD) left the policy rate unchanged at 4.50% for the third straight month, following 100 basis points of easing in June–August to boost economic activity.
November 27, 2019
At its 27 November meeting, the Monetary Board of the Bank of Guatemala (Banguat) held its fire and kept the key interest rate unchanged at 2.75%, where it has now been for two years.
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