The markets of Honduras, Panama, Guatemala, Belize, El Salvador, Nicaragua and Costa Rica will have to show fresh resilience in the resultant aftermath of COVID-19. Dependent on tourism and overseas remittances, central government funds will have been hit hard and economic recovery may be a protracted struggle.
None of the Central American economies are incredibly prosperous. Much of Central America (excluding Mexico and the Caribbean) relies on remittances from countries such as the USA for income. For example, in 2019 Guatemala received US$10.5bn in remittances from the USA, according to the country’s central bank. This is equivalent to 12 per cent of the country’s GDP.
The COVID-19 pandemic has added another level of financial challenges on top of their already distressed economic situation and government responses to the pandemic have been mixed. In addition, the reliance on remittances makes these countries vulnerable to impacts on the diaspora.
