Nicaragua and El Salvador will have the greatest economic fall in Central America this 2020 due to the COVID-19 pandemic with -4.3% each, according to calculations by the World Bank (WB), which also placed El Salvador as leader of the recovery in 2021 with an increase of 4.8% followed by Costa Rica with 4.5%.
The World Bank released this Sunday its forecasts for Latin America and the Caribbean in the context of the international health crisis, according to which the region will have a global fall of 4.6% of gross domestic product (GDP) with Ecuador and Mexico leading the way with -6%, each one.
In Central America, El Salvador and Nicaragua this year will have a 4.3% contraction in GDP, followed by Belize (-3.9%), Costa Rica with -3.3%; Honduras with -2.3%; Panama with -2% and Guatemala with -1.8%.
In the case of the Dominican Republic, which is geographically outside the region but is politically integrated as a member of the Central American Integration System (SICA), the World Bank forecast is that its GDP will register 0% growth in 2020.
The biannual report of the WB’s Office of the Chief Economist for the region, Martín Rama, stressed that “the coronavirus pandemic is causing a great supply shock” in the world, much of which is now under quarantine and distancing measures. social that has paralyzed production and the economy with different magnitudes.
In this context, “demand from China and the G7 countries is expected to decline abruptly, impacting countries that export raw materials in South America and countries that export services and industrial goods in Central America and the Caribbean,” he said. multilateral.
Rolando Gordón, professor at the Faculty of Economics of the state University of Panama (UP), told EFE that the “blows are strong” for the Central American subregion, which has heterogeneous economies, some highly dependent on the external sector, such as the case of Panama.
There are other Central American countries “that are highly dependent on remittances”, especially from the United States. and that it will foreseeably have “a sharp drop” given the ravages that a pandemic is causing in the North American nation, the main destination for exports in the region, Gordón explained.
Remittances are equivalent to about 20% of Honduras’ GDP; 17% of the GDP of El Salvador, and 10% of that of Guatemala, according to official data.
But an advantage of the region in the context of this crisis “is that many of its countries have a large agricultural production, which allows them to feed their population without resorting to so many international purchases,” a case in which Panama is not found, “whose agricultural sector represents only 1.5% of GDP,” added the university professor.
THE ROBOT IN 2021
For 2021, the World Bank calculates a recovery in the economy with El Salvador leading with 4.8%, followed by Costa Rica with 4.5%; Guatemala with 4.4%; Panama with 4.2%; Honduras with 3.9%; Dominican Republic with 2.5% and Nicaragua with 1.9%.
In the specific case of Panama, Dean Gordón believes that the economic recovery “will not be as fast or as strong” as the multilateral foresees.
Panama “is a country that depends a lot on international trade, and on what is done abroad. We are service sellers. And if those services continue to be partially paralyzed or growing little, that will be reflected in the economy and I do not think that hit 4% over there “in 2021, the expert said.