BLP’s summary of the most important regional news and opportunities offers an overview of the economic, social, and political landscape of Central America at just a click away.
Product exports grew 6% in the first quarter of the year. According to data from the Foreign Trade Promotion Agency of Costa Rica (PROCOMER), in the first quarter of this year 2024, exports of goods had an increase of 6% compared to the same period of 2023, reaching the sum of $4.652 billion, that is, $250 million more than last year. The precision and medical equipment industry shows a growth of 8%, agriculture 11%, food industry 13%, and livestock and fishing 2%. Click here for more information.
BCCR estimates a neutral monetary policy rate in a range of 3.9% to 4.9%. The Central Bank of Costa Rica (BCCR) has determined that the neutral monetary policy rate (TPM) should be located in a range between 3.9% and 4.9% for the medium term, considering the 3% inflation target and the recent estimate of the neutral real interest rate (TIRN) for the country. Click here for more information.
The Treasury placed bonds at lower rates and ratifies the trend of the recent auctions. The Ministry of Finance was able to place ¢109,286 billion in the auction of domestic debt securities held on Monday, April 29, reaching lower interest rates than those obtained in previous months. This trend implies a lower financing cost for the Government as the payment to investors is reduced. Click here for more information.
Analysts project GDP growth and improvements in inflation and the value of the dollar. Although real Gross Domestic Product (GDP) growth in 2023 was 5.1%, driven by a positive performance of consumption, investment, and exports towards the fourth quarter of that year, in the first quarter of 2024, a deceleration in some economic indicators is observed. Click here for more information.
PROCOMER and ICT seek new investments in Costa Rica’s tourism infrastructure. The Foreign Trade Promotion Agency of Costa Rica (PROCOMER) and the Costa Rican Tourism Board (ICT) participated in the Hotel Opportunities Latin America (HOLA) event in Miami, Florida, with the objective of attracting new investments in tourism infrastructure for the country. Surpassing the record of attracting foreign direct investment in 2023 encourages us to be more competitive when it comes to attracting new investment projects for the country. Click here for more information.
CAF reviews new investment opportunities for El Salvador. The development bank of Latin America and the Caribbean (CAF) is reviewing new cooperation opportunities with El Salvador. The financial institution stated that the analysis of new support opportunities and projects is part of a meeting between CAF’s executive president, Sergio Díaz-Granados, and the president of El Salvador, Nayib Bukele. CAF and the Salvadoran government also signed a Program to Support Low Emission Urban Mobility and a non-reimbursable technical cooperation with the National Administration of Aqueducts and Sewers (ANDA), with the objective of expanding water and sanitation coverage. Click for more information
El Salvador explores with India the development of 5G and railway infrastructure. A high-level delegation of Salvadoran government representatives visited India to explore eventual collaboration in the development of 5G technology, rail infrastructure, and bus supply. “Discussions underscored a mutual commitment to foster connectivity infrastructure, laying the groundwork for future cooperation,” notes the local press. Click for more information
Salvadoran exports to the US may not recover until 2025, Amcham advises. The American Chamber of Commerce of El Salvador (Amcham) predicted that exports of goods to the United States could stabilize until 2025 after closing the first quarter of 2024 with a contraction of 19%. Amcham’s executive director, Carmen Aída Muñoz, explained that the international environment still affects exports in general, despite the fact that local conditions “remain the same.” Click for more information
Congress of El Salvador approves a reform to speed up changes in the Constitution. The Legislative Assembly of El Salvador approved to amend an article of the Constitution that would allow expedited reforms of the magna carta, in force since 1983, in the legislature that takes office on Wednesday and that maintains the ample majority of the party Nuevas Ideas (NI), of president Nayib Bukele. The initiative, which must be ratified by the next Legislative Assembly for it to enter into force, was approved without previous study or analysis by 66 votes of the ruling party with 16 votes against from the opposition. Click for more information
Fitch maintains El Salvador’s debt rating at ”CCC+”. The agency Fitch Ratings announced on April 30 that it maintains El Salvador’s credit rating at ‘CCC+’. The agency explained that the rating is supported by a higher human development compared to countries in the region and a history of relative macroeconomic stability thanks to dollarization. However, the rating is affected by high public debt. Click for more information
Guatemala’s exports should grow by five percent in 2024. In a visit to Washington, D.C., the president of the Bank of Guatemala, Álvaro González, specified that for the present annual period they estimate exports at five percent, while in this period imports would be around 7.5 percent and in 2025 seven percent. The authority highlighted parameters reviewed by the Monetary Board this month, such as a better economic performance of this nation than the world and Latin America, along with the lowest monetary policy rate in the region. Click for more information
U.S. ANNOUNCES ECONOMIC SUPPORT. The United States announced that it will invest in the country in energy security, local economic growth, and infrastructure projects. The contribution will be in five areas, according to the Ministry of Public Finance. The United States Agency for International Development (USAID) will provide technical assistance to establish, expand, and strengthen the integrity units of the ministries and other agencies of the Executive. The objective is to support the fight against corruption. Click for more information
The anti-inflation rate is maintained. The Monetary Board announced that it will maintain the leading interest rate at 5 percent for the next three months. The president of the Board and of Banco de Guatemala, Álvaro González Ricci, said that conditions do not warrant a decrease or an increase, since the inflation target for this year, at 4 percent, with a margin of one percentage point upward or downward, does not show risks. The official also stated that the rest of the indicators, such as the growth of bank credit to the private sector and other interest rates, remain stable, in line with official projections. Click for more information
SAT requires technology giants to pay local taxes. The Superintendence of Tax Administration (SAT) is requesting that international platforms pay taxes in the country for the advertising and other business they sell and conduct in Guatemala. According to the superintendent Marco Livio Díaz, cited to the meeting of Leaders of the Congress, conversations have been held with such transnational companies and although no agreement has been reached, information was also requested from the Finnish tax authorities, and lawsuits will be prepared against the digital services companies that refuse to pay taxes. The official explained that SAT has the obligation to audit all businesses, and that there are few audits of the very small ones because they are not usually very profitable, but in the case of the large ones, such as these, it will not audit the entrepreneurs but the electronic platform as such. Click for more information
Agreement will strengthen the country’s health system. To strengthen the public health system, the Ministry of Public Health and Social Assistance (MSPAS) signed an agreement with the United Nations Office for Project Services (UNOPS), which will have a budget of $900 million. Of this, $90 million will be used to strengthen the management and administration of health services, including procurement and acquisition processes used by the MSPAS. In addition, an investment of $440 million is contemplated for the acquisition of medical equipment, based on the requirements of 45 hospitals, with an average of $2 million per year per health care center. Click for more information
Budget implementation 2024 closed at 23.06% as of April 30. The public administration of Honduras closed the first four-month period of 2024 with a budget expenditure of 23.06%. This is published by the Ministry of Finance (SEFIN) in its electronic portal. According to the SEFIN report, the items with the highest execution are personal services (wages and salaries) with 26,075.3 million lempiras, non-personal services with 17,301.2 million, transfers and donations with 16,608.5 million and public debt service with 16,563.7 million. Click for more information
National Congress approves the Law of the Labor Reserve Fund of the Private Contribution System. By a unanimous vote, the National Congress (NC) approved the Law of the Labor Reserve Fund of Individual Capitalization Administered by the Private Contributions System (RAP). The main purpose of this law, according to the NC, is to ensure economic support for workers, through benefits derived from the Individual Capitalization Labor Reserve Fund. The law also establishes that the RAP will administer this fund, which will be constituted by the contributions made by the employer, to guarantee the payment of severance or seniority premiums to the workers once the individual relationship has ended. Click for more information
Honduras and China to close the FTA in June. The process is in its fourth stage: the parties are reviewing the consensus reached so far and then will clarify the most important issues of the agreement. The Honduran Minister of Economic Development, Fredis Cerrato, said that they will discuss the exchange of goods, the number of years in which the tax reduction will apply, and the percentages that will be granted to China to enter its products without tariffs to the Central American country. Tegucigalpa will also examine exhaustively the goods it is interested in exporting to that market. Click for more information
Shrimp and coffee exports are the most affected by market closures and falling external prices. Economist Julio Raudales, expressed concern in the coffee and shrimp production sectors, since they are the most affected due to the closing of exports in different markets and with falling external prices. On several occasions the closure of some commercial niches and the decrease in the price of coffee and shrimp have been contemplated, which are some of the obstacles faced by the country to place its products. Click for more information
Central America’s Northern Triangle exceeds $5.5 billion in remittances, 4.9% more than in 2023. Family remittances received by El Salvador, Guatemala and Honduras, countries that make up the so-called Northern Triangle of Central America, totaled $5.574 billion between January and February, according to figures from the International Organization for Migration (IOM) consulted by EFE. The data indicates that this figure is 4.9% higher than the amount received by the three countries in the same period of 2023, when the total reached $5.313 billion. Click for more information
Nicaragua will build a photovoltaic plant with Chinese assistance. Vice President Rosario Murillo confirmed the signing of contracts and other negotiations related to the project, which will be developed in the municipality of Ciudad Darío with an investment of $80 million. This work should start up in the last quarter of this year. It is expected to generate sufficient energy and also allow the Nicaraguan Company of Aqueducts and Sanitary Sewers to reduce its electricity bills by approximately 40 percent. Click for more information
Nicaragua shows an increase in family remittances in January-March. According to data released by the Central Bank, between January and March, remittances arrived to the country mainly from the United States, Costa Rica, Spain, Panama and Canada, and in all cases there was an increase in the amount of foreign currency remitted. This entity added that the capital of this Central American nation, Managua, continues to be the main destination by capturing $304.2 million of the total received by the country, followed by Matagalpa, Chinandega, Leon and Nueva Segovia. Click for more information
Nicaragua highlights the importance of ALBA-TCP initiatives. During the XXIII Summit of the integrationist organization, Ortega warned that the imperialists are trying to undermine and destroy the unity of the countries of the region by means of Nazi-fascist governments, but the people will know how to confront them and “they will pay the price.” Click for more information
Key players in the energy transition in Central America: 93% solar, 74% wind and 58% water. Since the commitment to decarbonization, a key objective in the fight against climate change, the Central American and Caribbean region is experiencing a significant change in its energy landscape. There has been a notable growth in the use of renewable energies, especially biofuels and wind and solar energy. These sources are being used for electricity generation and to meet the energy needs of the region. Click for more information
Granada, Nicaragua’s colonial and tourist jewel, turns 500 years old. On the shores of the Great Lake or Lake Cocibolca, the largest in Central America, lies Granada, the colonial city that stands at the heart of Nicaragua with its cobblestone streets and colorful and elegant mansions, which celebrates 500 years since its founding by the Spanish. Click for more information
ECONOMIC INDEX
| Country | Exchange rate (x USD) | Basic passive rate in local currency | Current monetary policy rate | S&P sovereign debt indicator | Moodys Sovereign Debt Indicator | Fitch indicator | Interannual Inflation |
|---|---|---|---|---|---|---|---|
| Costa Rica | 511,04 | 4,77% | 4,76% | B | B2 | BB | -1,19% |
| El Salvador | – | 6,40% | Not available | B- | B3 | B- | – |
| Guatemala | 7,77 | 3,56% | 5,00% | BB- | Ba1 | BB | 4.18% |
| Honduras | 24,68 | 6,16% | 3,00% | BB- | B1 | No rating | 4.76% |
| Nicaragua | 36,62 | 3,30% | 7,00% | No rating | B2 | B- | 5,60% |
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