Economic Snapshot for Central America
June 17, 2020
The regional economy is forecast to shrink this year, hit by fallout from Covid-19
The pandemic is weighing heavily on trade, tourism and remittances inflows, while domestic containment measures are undermining household consumption and fixed investment.
Central America Monetary & Financial Sector News
Preliminary data showed that inflation ticked up from May’s 0.8% to 0.9% in June on stronger price pressures in Guatemala and Honduras, offsetting the effect of persistent deflation in El Salvador. This year, inflation is expected to remain muted amid weakened aggregate demand and low oil prices.
While the central banks of Costa Rica and Guatemala reduced their policy rates recently, other regional central banks stood pat on the heels of previous easing. Looking ahead, regional monetary policy authorities are expected to maintain a loose stance to mitigate the economic impact of Covid-19.
Regional currencies had a mixed run against the USD recently. While the Honduran lempira gained ground, the Costa Rican colón and the Dominican Republic’s peso depreciated; Guatemala’s quetzal, meanwhile, was virtually unchanged. This year, the regional exchange rate is expected to depreciate amid risk aversion and persistent twin deficits.
5 years of Central America economic forecasts for more than 30 economic indicators.
Central America Economic News
August 6, 2020
Remittances totaled a record-high USD 1,078 million in July (June: USD 963.3 billion), representing a 13.8% year-on-year increase—a five month high.
August 5, 2020
Economic activity sank 40.9% in year-on-year terms in May, which was a deterioration from April's 34.7% decrease and marked the largest fall on record.
August 4, 2020
The economy contracted 16.8% in the second quarter according to monthly economic activity (IMAE) data as domestic lockdown measures and the border closure crushed activity (Q1: +0.2% year-on-year).
July 31, 2020
At its end-July meeting, the Central Bank (BCRD) left its policy rate unchanged at 3.50% for the fourth straight meeting.
July 22, 2020
At its monetary policy meeting on 22 July, the Central Bank of Costa Rica (BCCR) maintained the monetary policy rate (MPR) of 0.75%, to where it was lowered from 1.25% on 17 June.
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