The Central American Bank for Economic Intergration (CABEI) expects real GDP
growth in 2009 to fall to between 1.1% and 2.1%, year-on-year, from 3.9% in
2008. The private sector is putting together its own plan to combat the effects
of the global economic slowdown. The plan will include proposals made by the
government and congress. Aráuz Consulting and Associates, a local economic
forecasting firm, suggests that the economy will be badly affected by the US
crisis, with remittances, the maquila industry and tourism suffering the most.
Investment will also fall. Overall the crisis will nullify the benefits of the
Cafta-DR, the free trade agreement between Central America and the US.
Aráuz
reported that the country's agricultural sector did well in 2008, growing by 6%.
Manufacturing managed 3.6% growth. Araúz estimates that overall investment
increased by 15%, with foreign direct investment (FDI) hitting a record US$500m.
It estimates that the current account deficit rose to 29% of GDP, up from 18%
previously, although this was covered by increased remittances and FDI. Imports
now amount to a staggering 80% of GDP, so any slowdown in remittances or
investment will have an immediate effect.
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