Central American Economies in 2015

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Although Central American economies have recovered from the 2008-2009 recession, they show relatively low levels of growth. GDP growth has translated into modest improvements in GDP per capita across the region, particularly for Costa Rica and Panama, the countries with the lowest levels of poverty.

In fact, persistent and long-standing issues such as poverty, inequality, general discontent and growing debt threaten to undermine economic and social development. For example, in Guatemala, Honduras, and Nicaragua, more than half the population lives on less than $4 a day. Moreover, popular frustration and dissatisfaction are high. In Guatemala, Honduras, Panama and Costa Rica, a majority of the population feels that the economy is on the wrong track, suggesting that many people are excluded from the benefits of economic growth. High levels of emigration can also be seen as a sign of dissatisfaction with the current situation in their country. Though Central American migration is a product of a number of historical factors, for many migrants today, the decision to leave is economic.

The region’s decision-makers face an important challenge in designing public policies that translate economic growth into sustainable, equitable economic development. An analysis of national development plans suggests that policymakers are struggling to address underlying economic issues in light of very pressing and immediate security concerns. Moreover, they continue to prioritize agriculture over other areas that arguably offer greater potential for economic development. Though social spending on education and health reflects some degree of commitment to equitable development in the region, issues of inefficiency unfortunately decrease the impact of these expenditures.

In sum, one of the greatest challenges that the Central American region faces is ensuring that economic development is sustainable and equitable.

 

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