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Central America and Caribbean Economic Forecast

Central America and Caribbean Economic Outlook

This year, regional GDP growth will decelerate notably from 2022, in no small part due to a more challenging base of comparison. Domestic demand will be restrained by still-high inflation and interest rates, while foreign demand will ease due to weaker global momentum. The El Niño weather pattern, political instability and a weaker-than-expected U.S. labor market are risks.

Central America and Caribbean Inflation

In July, regional inflation eased to 3.3% (June: 3.6%), with price pressures rising only in Jamaica and Panama. Inflation will ease markedly from last year in 2023 amid high interest rates, slower activity and a strong base effect. That said, it will remain above most central bank targets. Extreme weather events are an upside risk.

This chart displays Economic Growth (GDP, ann. var. %) for Central America and Caribbean from 2010 to 2021.

2018 2019 2020 2021 2022
GDP per Capita (USD) 5,524 5,649 5,221 5,764 -
Economic Growth (GDP, ann. var. %) 1.9 2.2 -7.4 7.5 -
Private Consumption (ann. var. %) 2.6 3.2 - - -
Fixed Investment (ann. var. %) 15.5 0.8 - - -
Unemployment (% of active population, aop) 7.6 7.7 11.2 8.9 -
Merchandise Imports (USD bn) 119.8 116.7 96.5 132.7 -
International Reserves (USD bn) 51.9 59.3 71.6 77.9 77.1
External Debt (% of GDP) 65.5 65.9 74.0 - -
Fiscal Balance (% of GDP) -3.0 -3.1 -7.5 -3.9 -
Inflation (CPI, ann. var. %, aop) 2.8 5.3 2.1 3.9 7.6
Policy Rate (%, eop) 4.49 3.57 2.06 2.46 6.36
Exchange Rate (LCU per USD, eop) 150 145 155 153 141
Current Account Balance (% of GDP) -1.7 -0.4 - - -
Merchandise Exports (USD bn) 77.5 76.3 67.6 90.3 -

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