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Central American economies struggling with the financial crisis

The financial crisis originated in America, definitely has had its effect on the world economy and especially on the American. Most economic and financial analysts agree that countries are in a better position before the crisis are those who used the rise in raw materials to improve their internal numbers to adjust their fiscal accounts and made a more open market to enhance and diversify their development opportunities. Chile, Peru and Colombia are prominent examples of this behavior.

In the case of Central, as seen from the graph that shows the growth of domestic product per country since 2007 and projected to 2013, the situation was mainly influenced by the slowdown in U.S. consumption, as Expenditures for tourism and investment performed in these economies were severely diminished by the mortgage debacle in the first instance and subsequently by the financial collapse.

The outlook report 2009 World Bank emphasizes this situation has forced some Central American currencies to depreciate by the weakening of its international positions and drought in U.S. currency markets.

Moreover domestic producers believe that despite their efforts generate media marketing and more efficient trade agreements with North America and Europe, exports of American products has declined substantially, growing from an annual growth of 5% in 2007 to about 1.7% in 2008. However, the growth of imports of goods and services increased from 11.9% to 12.3% annualized for the period mentioned above.

The previous situation which has led to a greater extent is a major inflationary pressures in economies that have been affected by higher transport costs, manufacturing and marketing. The next graph, shows the behavior of inflation in the countries of the region from 2007 to 2008 with forecasts for 2009 and 2013.

This situation is exacerbated a bit with the increased perception of risk by investors in light of declining income countries and definitely puts more pressure on domestic prices of products offered in American markets.

Notwithstanding the foregoing, it is worth noting that countries that have had a greater openness to international markets, as is the case of Panama, Costa Rica and the Dominican Republic (which, despite not in the isthmus is considered part of the region) have also shown a better economic situation and so it is possible that the internal situation is much more beneficial than other countries.

One indication of this perhaps we can find in the current account and that these economies can be seen in the following graph showing the performance of the current account as a percentage of GDP. The current account measures the level of trade or exchange of goods and services, if your balance is negative is indicative that the country imports more than it produces and therefore its economy depends on international market conditions

For of Nicaragua, its dependence on imports is the highest in the region, so their debt is higher in terms of the size of its economy. Unlike other Latin American countries like Venezuela, Brazil and Chile, whose dependence on raw materials has provided greater opportunities for additional revenue product of the high prices of these goods registered in the past, Nicaragua may need to increase their debt maintain the level of the economy, complicating the situation in view of the little liquid that the credit market has today.

In any case

countries that are better in this regard are Costa Rica and Guatemala, as their level of dependence on imports is lower compared with its exports, however, depend heavily on its tourism and export markets are maintained at levels sufficiently high to maintain their balance in the medium term.

In the case of Panama it is possible that the rapid construction of the new channel and the strengthening of its financial and commercial sector will enable additional revenue to offset the high level of imports of goods and services. Perhaps the impact for these countries is less dramatic especially if they manage to balance their accounts Prosecutors and the opening of their markets.

Despite the crisis, it is possible that the Central American countries do not suffer as strongly from the crisis, as can be seen as investment opportunities for low-cost and low complexity in terms of its dependence on commodity markets and financial.

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