A mixed performance
In Costa Rica, praise for national economic management, and early-year successful evaluations from external analysts then embraced by the official discourse, now seem premature, as the country is falling short in several macroeconomic indicators. Economic activity is still increasing nicely, but at a slower pace than in 2022-2023. Dynamism is coming from the FTZ, amid multinational companies’ nearshoring and friend shoring strategies, with investment returning from China due to geopolitical conditions. Unemployment decreased but so did employment, due to the composition of economic activity. Absent new policies for development and structural changes, the faint 2023 boom could vanish soon if internal imbalances neutralize the external positive influences. The Central Bank approved a new monetary policy rate cut during the third week of October, amid criticisms from local private analysts for the slow reaction to the negative or near-zero inflation rate for 18 months.
In El Salvador, the main topic of this report will be a detailed analysis of the pension debt, and its effect on fiscal deficit and public debt, that justify the estimation of adjusted indicators for a more accurate assessment of the current public finance situation and risks. We also discuss the successful massive buyback offer of sovereign bonds placed by the government on October 4th: $7.2 billion of notes maturing between 2027 and 2052. Offers accounted for about 25% of that amount, and the government finally agreed to exchange principal from various issues for $1.031 million, equivalent to 14.3% of the offer. Main macroeconomic indicators continue observed trends outlined in previous reports, and will be detailed again in coming months.
Guatemala's economic trends in 2024 have been positive and stable, amid slow global growth, commodity price fluctuation and geopolitical tension. During H1 the country's economy grew moderately, driven by steady remittances inflow. Key sectors, such as retail, manufacturing and services, contributed significantly to GDP recovery, while private investment and exports rebounded after a difficult 2023. The current account surplus and notable decline in inflation — which fell from 3.8% in January to 2.1% in September—strengthened the economic landscape. However, political tensions arose following the appointment of Supreme Court judges, impacting President Bernardo Arevalo’s anti-corruption efforts. Overall, Guatemala is positioned for continued economic improvement, with a focus on maintaining a favorable business climate amid challenges.
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