Central America Economic Forecast

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.

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5 years of Central America economic forecasts for more than 30 economic indicators.


Central America Economic News

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