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Economy of Central America

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ThePanama Canalis the principal trade route between Central America and the world
World economy
Development of real GDP per capita of economies in Central America

Theeconomy of Central Americais the eleventh-largest economy inLatin America,behindBrazil,Mexico,ArgentinaandColombia.According to theWorld Bank,the nominal GDP of Central America reached 204 billionUS dollarin 2010, as recovery from thecrisis of 2009,wheregross domestic product(GDP) suffered a decline to 3.8%.[1]The major economic sectors areagricultureandtourism,although the industrial sector has shown strong growth, mainly inPanama.

TheU.S.is the main socio-commercial partner of allCentral Americancountries. Other important socio-commercial countries in Central America are theEuropean Union,Japan,Dominican RepublicandMexico.[2]Currently, the Central Americanblocis based on a bilateralfree trade agreement(FTA) with theUnited Statesknown asCAFTA-DR,and another in negotiations withPeru.ThePanama Canalis 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,EuropeandAsia.

The economic development ofCentral Americais 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 GDPpurchasing power parity(PPP) of $81.51 billion (2013 data).[4]It maintains strong commercial relations mainly with theUnited States,Mexico,Taiwan,Dominican Republic,GermanyandKorea.According to theInternational Monetary Fund,Guatemala has a stable economy.[5]Guatemala has one of the lowest GDP per capita in the region
  • Panama:Besides having the highestHuman 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 afterChile.It has strong business relationships and treaties with the United States,China,Colombia,Costa Rica,JapanandSingapore.
  • 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, theEuropean 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 theWorld Bank,El Salvador is the fourth-largesteconomyin the region, and has a GDP PPP of $50,903 million.[3]TheSalvadoran economygrew 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 theCIA World Factbook.In percentage, Honduras has the largestcheap laborin Central America, its economy is mainly agricultural, the main export products arerice,coffee,bananas,vegetables,and other products.[9]
  • Nicaragua:Is the least stable country in the region, and the second-poorest in the hemisphere afterHaiti.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 theUnited 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 nationalcurrency,with the exception ofEl Salvador,where theUS dollarwas taken as currency in the country as of January 1, 2001,[12]replacing theSalvadoran colón.El Salvador will also makeBitcoinan 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, thePanamanian balboaand 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 DollarandBitcoin
Guatemala Quetzal
Honduras Lempira
Nicaragua Córdoba
Panama BalboaandUS dollar

Gross domestic product by country (2012)

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Guatemalahas the highestgross domestic productin Central America, followed byPanama,Costa RicaandEl Salvador.The GDP data are based on data from theWorld Bankcorresponding to 2012.[14]The rates of economic growth come from theCIA 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 areagriculturaltype (cocoa, coffee, rice, flowers, etc.), the largest purchaser is theUnited States.While on the other hand, the region importsnontraditional 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 theWorld Bank,Panama,Costa RicaandGuatemalaare the countries that receive moreforeign direct investmentin 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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Central Bank of Costa Rica

Bankingis one of the main economic activities in Central America, which takes place mainly inPanama,El SalvadorandCosta Rica.Since 2010,Guatemala,HondurasandNicaraguahave developed strong growth of the banking. Regarding financial centers, El Salvador and Panama are the only Central American countries that have aWorld Trade Center.

The economist magazineAmerican Economypublished 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, thefirst Central American Bankis the number 39 in the list, and it is theHSBC PanamainPanama City.

Within the first 100 places in the general ranking ofAmperica Economy,7 Central banks appears: HSBC Panama ranked 39th,General of Panamaat 42,National Panama(57),National of Costa Rica(70),Bladexof Panama (75),Agricultural Bank of El Salvador(85) andCosta 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 JapónSIECA. July 2013. Retrieved: 25/07/2015.
  3. ^abReport for Selected Countries and SubjectsInternational Monetary Fund.
  4. ^Guatemala Producto Interno Bruto (PIB)IndexMundisources of theCIA The World Factbook.Retrieved: 25/07/2015.
  5. ^"FMI calificó como estable la economía de Guatemala".Archived fromthe originalon 2013-04-26.Retrieved2015-07-26.
  6. ^Panamá - Índice de Desarrollo Humano - IDHRetrieved: 25/07/2015.
  7. ^Economía panameña crece al 6,2%Retrieved: 25/07/2015.
  8. ^Perspectivas del FMI sobre CentroaméricaRetrieved: 25/07/2015.
  9. ^CIA The World Factbook - HondurasRetrieved: 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".asamblea.gob.sv.Retrieved2021-06-22.
  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 • 2010Panamá. Retrieved: 25/07/2015
  17. ^Balance preliminar de las economías de América Latina y el Caribe • 2010Costa Rica. Retrieved: 25/07/2015
  18. ^Balance preliminar de las economías de América Latina y el Caribe • 2010El Salvador. Retrieved: 25/07/2015
  19. ^Balance preliminar de las economías de América Latina y el Caribe • 2010Guatemala. Retrieved: 25/07/2015
  20. ^Balance preliminar de las economías de América Latina y el Caribe • 2010Honduras. Retrieved: 25/07/2015
  21. ^Balance preliminar de las economías de América Latina y el Caribe • 2010Nicaragua. Retrieved: 25/07/2015
  22. ^Inversión extranjera directa por país (2010-2014)DataWorld Bank.Retrieved: 25/07/2015.
  23. ^Ranking de Bancos de CentroaméricaThe Economist magazineAmerican Economy.Retrieved: 25/07/2015.
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