In a report released Wednesday in Lima (Peru), site of the annual meeting of the international body, the International Monetary Fund predicts that the Central American countries, including economies such as Panama, Nicaragua, Costa Rica, Dominican Republic cited or included will grow 4% this year, slightly less than in 2014 (4.4%). In any case, a more favorable outcome than the decline of 0.3% estimated for the whole of Latin America and the Caribbean.
“This group of countries benefiting from the recovery in the United States and the continued weakness of international energy prices, as the region is a net importer of oil,” explain the technicians of the Fund. “This mixture promotes a virtuous circle of higher demand, lower inflation and a better external position,” he added.
The recovery in the United States and the appreciation of the dollar translated into an increase in tourists from the economic giant and a support remittances from emigrants, two sources of highly relevant income for the area. In that combination, and cheaper energy bills, Panama adds a remarkable contribution of investment to achieve the highest growth in Latin America, 6% in 2015. Dominican Republic (5.5%) and Nicaragua (4% ) also recorded significant increases, only replicated by Bolivia (4.1%) between the economies of South America.
The Fund urges “seize the opportunity” offered by this combination of economic factors in making a smoother fiscal adjustment, accompanied by tax reform in most of the area. The IMF warns that if corruption and lack of revenue capacity encyst, public debt will continue to rise in El Salvador, Costa Rica, Nicaragua and Dominican Republic, which “could raise questions of sustainability” that markets punish.
The regional report highlights the good performance of 2015 took place despite some blows to growth in countries like Costa Rica, which fitted the exit of the Intel- or El Salvador multinational -for a decline of remittances from the United States. The Fund believes that the political crisis in Guatemala has not taken its toll on growth, but may do so in the future.
Leveraging the strength of growth and promote an improvement in tax collection -to maintain balanced budgets and finance while social assistance programs are key to tackle the twin challenges of poverty and inequality, says the Fund. Here the contrast with the rest of Latin America is negative: inequality is higher than the average for the region, but especially poverty rates remain very high: in Guatemala and Honduras, 40% of the population lives on less of $ 2.5 a day, the bar reference using international organizations to highlight the situation of the most excluded.
In Caribbean countries, linked to the tourism boom are those that fare better (Bahamas, Barbados, Jaimaca …) in the estimates of the Fund, although agriculture and construction, other sources of growth in the area have had a worse performance. For them, the IMF predicts growth of 2.3% this year and next. The drop in oil prices keeps inflation under control and alleviate somewhat bulky external deficits of these countries, close to 12% of GDP.
For Caribbean countries that export raw materials (Belize, Guyana, Trinidad and Tobago, the growth outlook is more moderate (2%), the impact of the price shock, lighter than the big exporters fit metals and oil in South America. The decline in sales revenues abroad itself felt in the current account (in three years has doubled to reach 8%) and the public deficit.
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