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The central banks of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic forecast regional economic growth of close to 4.0% for 2024, with moderate inflationary pressures. This estimate was discussed at the recent Central American Monetary Council (CMCA) meeting, where authorities evaluated economic performance and shared projections for the end of the year and 2025. In their analysis, they considered internal and external factors, such as the recent elections in the United States and the conflicts in the Middle East and Eastern Europe.
It was noted that the economic growth dynamic in the region continues, influenced by a combination of factors that include the increase in credit to the private sector (businesses and households), greater public investment in some countries and the moderate recovery of external flows from direct investment, remittances and tourism, and to a lesser extent, exports. In this context, the importance of using the regional payment system to facilitate trade among CMCA member countries was highlighted, as the Banco Central de Reserva de El Salvador has done by promoting Transfer 365 CARD, being the country that has generated the most interregional payment transactions.
The economic authorities acknowledged that global growth continues to be stable, although at moderate rates, driven in part by improved expectations for the United States. According to their projections, inflation has shown a deceleration in both advanced and emerging economies, with the exception of certain sectors, such as services. Despite this, inflation in the CARD region remains within tolerance ranges for 2024, reflecting the control exercised by each country’s monetary policies.
In terms of economic growth, the CARD region, as measured by the Índice Mensual de Actividad Económica (IMAE), achieved a year-on-year growth of 4.0% in july 2024. Average inflation in the region stood at 2.35% year-over-year in september 2024, highlighting the stability in prices. Costa Rica presented a negative variation of -0.14%, while El Salvador maintained a rate of 0.58%, Guatemala 2.11%, Honduras 4.49%, Nicaragua 3.86% and the Dominican Republic 3.29%. The convergence towards inflation targets is attributed to the restrictive policies of central banks, aimed at controlling the increase in the price level.
Nevertheless, inflation risks persist due to external factors, such as the increase in commodity prices, especially oil, and international conflicts that could affect food prices. Therefore, the monetary authorities, faithful to their commitment to society, will be attentive to act with the appropriate monetary and financial policy measures.
