External Tailwinds Supporting Regional Underperformers
Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook - a situation which is only exacerbated by the fragmented political environment.
In contrast, our short-term outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their manufactured goods, rising remittance inflows and lower oil prices in the quarters ahead. That said, significant security risks will temper foreign direct investment into these countries over the next five years, and the risk of prolonged social unrest in the wake of recent corruption scandals has risen. Over the longer-term the entry into force of the Trans-Pacific Partnership will offer increased headwinds to these countries' manufacturing sectors. Nicaragua's macroeconomic position is also especially vulnerable given its strong ties to Venezuela. Our core view is for a moderate slowdown in growth in the coming years due to an end to the Tariff Preference Level programme and our view that Venezuela will modestly reduce assistance to Nicaragua. However, if Venezuela were to suddenly cut off aid under the ALBA-TCP programme, this would see a sharp downturn in Nicaraguan growth and rising pressure on the country's macroeconomic buffers.
Major Forecast Changes
We have revised Guatemala's real GDP growth. After the country recorded 4.2% real GDP growth in 2014, we forecast it will post 4.0% growth in 2015 (downgraded from our previous forecast of 4.4%) and 3.7% growth in 2016 (revised from 4.0%)....
The Central America Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.
- Forecast the pace and stability of Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's economic and industry growth through end-2019.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's country risks against regional peers using BMI's country comparative Risk Index system.
- Evaluate external threats to doing business in Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras, including currency volatility, the commodity price boom and protectionist policies.
BMI provides our fully independent 5-year forecasts for Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Central America Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
- Foreign Direct Investment - approvals, inflows and climate.
- External Debt - debt profile (short and long-term plus public and private sector obligations).
- Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.
- Rely upon BMI's 100% independent forecast scenarios for Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras and underlying assumptions - we take no advertising and are privately-owned.
- Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
- Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.
What are the political risks to doing business in Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras over the next 5-years?
BMI's Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents
- SWOT Analysis for the Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras Market - Political Strengths, Weaknesses, Opportunities and Threats facing Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras.
- Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's risk are compared with regional and global averages.
- Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
- Long-Term Political Outlook BMI examines the structural risks to the stability of Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.
- Benchmark Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
- Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
- Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.
*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.