Economic Snapshot for Central America
October 9, 2019
Growth is seen fairly stable next year, with slowdowns in the Dominican Republic and Puerto Rico offset by faster growth in Costa Rica and Panama. Political uncertainty in Haiti and Nicaragua, exposure to natural disasters and uncertainty over the future of the TPS program in the U.S.—the termination of which could hit remittances—are downside risks.
Central America Monetary & Financial Sector News
Regional inflation dipped to 2.0% in August from 2.3% in July, chiefly on lower price pressures in El Salvador, Guatemala, Honduras and Panama. Looking ahead, more accommodative monetary policies and broad currency weakening should push up regional inflation moving forward, although price pressures will still be mild. Fluctuating oil prices remain a key risk to the outlook.
Major regional currencies not tied to the dollar have lost ground over the last month amid elevated international uncertainty, and lower domestic interest rates in the cases of Costa Rica and the Dominican Republic. Going forward, most currencies should depreciate due to a mixture of persistent fiscal and current account deficits, political instability and looser monetary stances.
Costa Rica’s Central Bank cut rates in recent weeks on soft economic activity and downside risks to the inflation outlook. Looking ahead, under-control price pressures and likely further easing from the Federal Reserve could provide scope for more rate cuts by regional central banks.
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5 years of Central America economic forecasts for more than 30 economic indicators.
Central America Economic News
Dominican Republic: Inflation rises in September but remains below the Central Bank’s target range
October 14, 2019
Consumer prices rose 0.38% in September over the prior month, up from August’s 0.34% uptick.
Panama: Consumer prices fall in August
October 14, 2019
Consumer prices were unchanged over the prior month in September, following the 0.3% decline in August.
Dominican Republic: 2020 budget should shore up growth next year; fiscal concerns to linger
October 2, 2019
On 26 September, the government announced the 2020 budget, which should support the economy next year thanks to notable increases in current and capital expenditure.
Guatemala: Inflation eases in August
September 30, 2019
Consumer prices dropped 0.86% month-on-month in August, down from the 0.06% decrease in July.
Dominican Republic: Economic activity picks up in August on monetary stimulus
September 30, 2019
The economy gained momentum in August, according to the Central Bank’s monthly indicator for economic activity (IMAE, Indicador Mensual de Actividad Económica).
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