Analysis
8 Aug 18

SNAPSHOT: Economy in Central America

Central America is commonly overshadowed by its larger neighbors Mexico and Colombia. However, with its population growing by more than 15% over the last decade to approximately 49 million residents, regional fleet and mobility managers are eying the rapidly growing seven-country-region.

To give you a better look at the business environment in the area, here is a snapshot of the top three largest economies in the region, Guatemala, Costa Rica, and Panama.

Guatemala

Home to some 15.5 million residents (largest in Central America), most of Guatemala’s population lives in the southern half of the country, particularly in the mountainous and rural areas. As it has the highest population growth rate in the region, it is the most populous country in Central America, as well as the youngest.

Guatemala’s currency is the Quetzal (GTQ) and its 2017 GDP was US$70.8 billion (US$4,567 per capita). While its benchmark interest rate is 2.75% (2018), inflation and unemployment are 3.79% (2018) and 2.3% (2017) respectively.

The country's main industries are sugar, textiles, furniture, chemicals, petroleum, metals, rubber, and tourism. Its capital, Guatemala City, has 942,349 residents.

Costa Rica

Compared to some of its neighbors, Costa Rica and its 4.93 million residents rarely faces periods of violence which end up hindering democratic progress. Although the country still maintains a large agricultural sector, it has expanded its economy, developing strongly in the industries of technology and tourism.

Foreign investors are commonly attracted by the country's political stability and relatively high standard of living, considering the region, as well as the incentives offered in the free-trade zones. Its economy still faces some challenges though, and this is due to its rising fiscal deficit and public debt.

Its currency is the Costa Rica Colón (CRC) and its 2017 GDP was US$58.9 billion (US$11,947 per capita). Interest is 5% (2018), inflation 2.13% (2018), and unemployment rate 8.7% (2018). San José is the capital city, and it has approximately 335,007 inhabitants.

Panama

Panama is well known for its Panama Canal of which was recently expanded. The country's dollar-based economy is highly supported by services related to operating the canal, as well as logistics, banking, insurance, tourism, and others. The country is also a center for offshore banking.

Despite the growth and success of the Canal, prosperity is not evenly spread throughout the country, giving Panama and its 3.75 million residents the second worst income distribution in Latin America.

GDP in 2017 was US$59.1 billion (US$15,760 per capita), interest is 8.2% (2018), inflation 1.2% (2018), and unemployment 6.1% (2017). Its capital, Panama City, has about 408,168 residents. 


Panama City financial district (Source: Shutterstock)
 

 

 

Authored by: Daniel Bland