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Economy of Central America

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The economy of Central America is the eleventh-largest economy in Latin America, behind Brazil, Mexico, Argentina and Colombia. According to the World Bank, the nominal GDP of Central America reached 204 billion US dollar in 2010, as recovery from the crisis of 2009, where gross domestic product (GDP) suffered a decline to 3.8%.[1] The major economic sectors are agriculture and tourism, although the industrial sector has shown strong growth, mainly in Panama.

The Panama Canal is the principal trade route between Central America and the world
Development of real GDP per capita of economies in Central America

The U.S. is the main socio-commercial partner of all Central American countries. Other important socio-commercial countries in Central America are the European Union, Japan, Dominican Republic and Mexico.[2] Currently, the Central American bloc is based on a bilateral free trade agreement (FTA) with the United States known as CAFTA-DR, and another in negotiations with Peru. The Panama Canal is the connection of Central America with the rest of the world, and the main means of communication for trade with Central America, South America, United States, Europe and Asia.

The economic development of Central America is the middle level, although competitiveness is remarkable:

  • Guatemala: Is the largest economy in Central America and the tenth largest in Latin America, based on nominal GDP ($118,655 million)[3] and GDP purchasing power parity (PPP) of $81.51 billion (2013 data).[4] It maintains strong commercial relations mainly with the United States, Mexico, Taiwan, Dominican Republic, Germany and Korea. According to the International Monetary Fund, Guatemala has a stable economy.[5] Guatemala has one of the lowest GDP per capita in the region
  • Panama: Besides having the highest Human Development Index (HDI) in the region,[6] Panama is the fastest growing economy in Latin America, having grown 6.2% in 2014. [7] Panama has the highest GDP per capita in the region. Panama is recognized as the most industrial country in Central America, and the second in Latin America after Chile. It has strong business relationships and treaties with the United States, China, Colombia, Costa Rica, Japan and Singapore.
  • Costa Rica: Has the third-largest in the region and has more trade relations than many Central American countries, mainly with the United States, Singapore, the European Union, Mexico, Chile, China, CARICOM (Caribbean Community), among others countries. Politically, Costa Rica is the most stable country in Central America.
  • El Salvador: According to the World Bank, El Salvador is the fourth-largest economy in the region, and has a GDP PPP of $50,903 million.[3] The Salvadoran economy grew by 3% in 2010, after a strong contraction in 2009.[8]
  • Honduras: Is the second-poorest country in Central America, with 60% living in poverty according to the CIA World Factbook. In percentage, Honduras has the largest cheap labor in Central America, its economy is mainly agricultural, the main export products are rice, coffee, bananas, vegetables, and other products.[9]
  • Nicaragua: Is the least stable country in the region, and the second-poorest in the hemisphere after Haiti. Nicaragua has the lowest HDI in the region, and has the lowest minimum wage in Central America (USD $141).[10] Nicaragua receives financial assistance as 4 out of 10 people live on less than a dollar a day,[11] according to the United Nations Development Programme. Nicaragua is integrated into the Bolivarian Alliance for the Peoples of Our America (ALBA).

Currency by country

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Each country has its own national currency, with the exception of El Salvador, where the US dollar was taken as currency in the country as of January 1, 2001,[12] replacing the Salvadoran colón. El Salvador will also make Bitcoin an official currency beginning on September 7, 2021.[13] Belize is a country where the dollar circulates, but of Belizean type. In the case of Panama, two types of currency are in use, the Panamanian balboa and the US dollar. The Balboa is pegged to the US dollar 1:1, is issued only in coin form, and is subdivided into 100 centésimos. For all practical purposes the currency of Panama is the US dollar.

Countries
 Official Currency
  Belize Belizean dollar
  Costa Rica Colón
  El Salvador US Dollar and Bitcoin
  Guatemala Quetzal
  Honduras Lempira
  Nicaragua Córdoba
  Panama Balboa and US dollar

Gross domestic product by country (2012)

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Guatemala has the highest gross domestic product in Central America, followed by Panama, Costa Rica and El Salvador. The GDP data are based on data from the World Bank corresponding to 2012.[14] The rates of economic growth come from the CIA World Factbook.[15]

Countries GDP PPP GDP PPP per capita nominal GDP nominal GDP per capita Economic growth (%)
  Belize $2,754,000,000 $8,412 $1,520,000,000 $4,481 +3.00
  Costa Rica $58,599,000,000 $12,558 $44,884,000,000 $9,500 +5.10
  El Salvador $45,980,000,000 $7,734 $23,985,000,000 $4,108 +1.90
  Guatemala $78,419,000,000 $5,191 $50,296,000,000 $3,330 +3.30
  Honduras $37,670,000,000 $4,593 $18,180,000,000 $2,185 +3.30
  Nicaragua $19,894,000,000 $3,336 $7,828,000,000 $1,291 +4.10
  Panama $67,804,000,000 $17,830 $36,252,500,000 $9,534 +10.00

Exports and imports

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Regarding exports and imports, the balance is negative in the region, each country consumes more than it produces. The main products that the region exports are agricultural type (cocoa, coffee, rice, flowers, etc.), the largest purchaser is the United States. While on the other hand, the region imports nontraditional products (cars, appliances, electronics, etc.) and the main seller is United States.

Countries
 Imports of goods and services (2010) Exports of goods and services (2010) Balance
  Panama[16] $25,232,000,000 $18,106,000,000 +$835,000,000
  Costa Rica[17] $14,010,000,000 $12,120,000,000 +$120,000,000
  El Salvador[18] $8,234,000,000 $9,333,000,000 +$135,000,000
  Guatemala[19] $8,135,000,000 $8,957,000,000 +$130,000,000
  Honduras[20] $7,235,000,000 $7,002,000,000 +$96,300,000
  Nicaragua[21] $4,723,000,000 $3,366,000,000 +$100,500,000

Foreign direct investment

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According to the World Bank, Panama, Costa Rica and Guatemala are the countries that receive more foreign direct investment in Central America, and exceeded one billion US dollars. The next table shows the values in dollars, and investment growth between 2010 and 2014:[22]

Countries Foreign investment (2010) Foreign investment (2011) Foreign investment (2012) Foreign investment (2013) Foreign investment (2014)
  Belize $96,449,877 $95,348,525 $194,201,409 $92,247,731 $141,097,030
  Costa Rica $1,850,664,231 $2,141,615,128 $2,692,160,896 $3,284,494,667 $2,345,257,533
  El Salvador $113,160,684 $122,500,004 $447,709,564 $242,345,997 $474,801,761
  Guatemala $845,598,200 $1,139,659,133 $1,263,638,429 $1,353,141,908 $1,204,670,350
  Honduras $484,836,873 $1,042,571,021 $1,067,550,208 $1,069,029,263 —
  Nicaragua $489,900,000 $936,300,000 $767,658,534 $815,500,000 $840,000,000
  Panama $2,549,100,000 $4,395,600,000 $3,297,100,000 $5,053,200,000 $5,213,800,000

Banking

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Banking is one of the main economic activities in Central America, which takes place mainly in Panama, El Salvador and Costa Rica. Since 2010, Guatemala, Honduras and Nicaragua have developed strong growth of the banking. Regarding financial centers, El Salvador and Panama are the only Central American countries that have a World Trade Center.

The economist magazine American Economy published its ranking "The 250 best banks in Latin America," presented the list of the 42 Central American banks included.

Within the Latin American general ranking, the first Central American Bank is the number 39 in the list, and it is the HSBC Panama in Panama City.

Within the first 100 places in the general ranking of Amperica Economy, 7 Central banks appears: HSBC Panama ranked 39th, General of Panama at 42, National Panama (57), National of Costa Rica (70), Bladex of Panama (75), Agricultural Bank of El Salvador (85) and Costa Rica Bank of Costa Rica (92).[23]

See also

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References

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  1. ^ GDP growth (annual %) World Bank Data. Retrieved: 25/07/2015.
  2. ^ Relaciones Comerciales entre Centroamérica, Panamá y Japón SIECA. July 2013. Retrieved: 25/07/2015.
  3. ^ a b Report for Selected Countries and Subjects International Monetary Fund.
  4. ^ Guatemala Producto Interno Bruto (PIB) IndexMundi sources of the CIA The World Factbook. Retrieved: 25/07/2015.
  5. ^ "FMI calificó como estable la economía de Guatemala". Archived from the original on 2013-04-26. Retrieved 2015-07-26.
  6. ^ Panamá - Índice de Desarrollo Humano - IDH Retrieved: 25/07/2015.
  7. ^ Economía panameña crece al 6,2% Retrieved: 25/07/2015.
  8. ^ Perspectivas del FMI sobre Centroamérica Retrieved: 25/07/2015.
  9. ^ CIA The World Factbook - Honduras Retrieved: 25/07/2015.
  10. ^ [1] Prensa Latinoamericana. Retrieved: 25/07/2015.
  11. ^ [2] UNDP. Retrieved: 25/07/2015.
  12. ^ [3] La Prensa Gráfica. Retrieved; 25/07/2015.
  13. ^ "El Salvador, primer país del mundo en reconocer al Bitcoin como moneda de curso legal | Asamblea Legislativa de El Salvador". www.asamblea.gob.sv. Retrieved 2021-06-22.
  14. ^ Gross domestic product 2012, PPP. World Bank. Retrieved: 25/07/2015.
  15. ^ «Country Comparison. GDP - real growth rate», CIA The World Factbook. Retrieved: 25/07/2015.
  16. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 Panamá. Retrieved: 25/07/2015
  17. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 Costa Rica. Retrieved: 25/07/2015
  18. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 El Salvador. Retrieved: 25/07/2015
  19. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 Guatemala. Retrieved: 25/07/2015
  20. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 Honduras. Retrieved: 25/07/2015
  21. ^ Balance preliminar de las economías de América Latina y el Caribe • 2010 Nicaragua. Retrieved: 25/07/2015
  22. ^ Inversión extranjera directa por país (2010-2014) Data World Bank. Retrieved: 25/07/2015.
  23. ^ Ranking de Bancos de Centroamérica The Economist magazine American Economy. Retrieved: 25/07/2015.
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