According to the United Nations regional organization’s Preliminary Overview, the international context was affected by trade tensions and great political uncertainty, which led to global growth of 2.5% in 2019 (3.1% in 2018), the lowest rate in the last 10 years.

The economies of Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) and the Dominican Republic – known as the CARD countries in Spanish – will have a weighted average growth rate of 3.2% in 2020, with the highest rates forecast for the Dominican Republic and Panama, the Economic Commission for Latin America and the Caribbean (ECLAC) revealed.

The document Preliminary Overview of the Economies of Central America and the Dominican Republic in 2019 and Prospects for 2020 explains that the international context was affected by trade tensions and great political uncertainty, which led to global economic growth of 2.5% in 2019 (3.1% in 2018) – marking the lowest rate in the last 10 years.

In the case of Latin America, it is forecast that GDP will grow 1.3% in 2020 (0.1% in 2019) thanks to a recovery in domestic demand, but in an unfavorable external environment.

In fiscal terms, it is forecast that public finances in the majority of the CARD countries will have some breathing room in 2020 due to greater economic growth and lower international interest rates. Nonetheless, attention should be paid to the evolution of the debt in Costa Rica and El Salvador, where an upward trend has been seen in recent years.

In 2020, inflation is expected to be moderate, as long as international commodities prices remain stable and even if they trend down in terms of the annual average. In addition, a slight reduction in the average unemployment rate is foreseen due to a modest acceleration in economic activity.

More generally, emerging economies (like those of the CARD countries) are expected to experience a slight recovery while international trade flows are seen increasing, which should result in more vigorous foreign trade for the subregion. The prices for primary products will decline again, even those crucial to the CARD countries’ exports, such as coffee and sugar. In contrast, lower international prices for oil and fuel will have a positive effect on the subregion. In light of this dynamic, the terms of trade will hold relatively steady.

These projections face significant risks such as financial uncertainty linked to trade tensions, geopolitical conflicts, the deceleration of global economic growth, and the risk of pandemics, which, after their recent materialization, could lead to lower growth in GDP and trade flows, with the resulting impact on all other economic variables.