World Bank Central America Economic Outlook: Projections for Central America’s Economies

By Eddie Galdamez  |  Oct 11th, 2023

World Bank Central America Economic Outlook. – Once again, Panama, with a 6.3% projected economic growth, leads the economic outlook in Central America. Costa Rica is second with a 4.2% projected increase, followed by Guatemala’s 3.4% and Hondura’s 3.2% economic growth outlook.

El Salvador is at the bottom of the World Bank’s growth projections for Central America, with a 2.8% estimated growth. Second to last is Nicaragua, with a 3.1% economic outlook.

The Central America Economic Outlook, presented by the World Bank, is a vital resource for understanding the economic dynamics of the region.

World Bank Central America Economic Outlook
2020 2021 2022 2023 2024
Panama -17.7 15.8 10.8 6.3 6.4
Costa Rica -4.3 7.8 4.3 4.2 3.3
Guatemala -1.8 8.0 4.1 3.4 3.5
Honduras -9.0 12.5 4.0 3.2 3.0
Nicaragua -1.8 10.4 3.8 3.1 3.2
El Salvador -7.9 11.2 2.6 2.8 2.3
Source: World Bank

All three organizations (World Bank, ECLAC, and IMF) outlooks indicate that Panama and Costa Rica will be the top two economies in Central America in 2023.

On the other hand, they also agree that the Salvadoran economy will have the lowest economic growth in 2023. The Salvadoran Central Reserve Bank (BCR) foresees a 2.6% economic growth for El Salvador in 2023

According to the World Bank, “Latin America and the Caribbean (LAC) made progress in macroeconomic resiliency over previous decades and navigated the multiple post-pandemic crises with relative success.”

Nevertheless, growth will remain inadequate in the Central American region to reduce poverty and create jobs, while fiscal constraints limit necessary investments, according to the international entity.

The World Bank also noted that while GDP in countries from South and Central America bounced back rapidly and surpassed pre-pandemic levels, they are still in the process of converging to their pre-pandemic trend.

Furthermore, the World Bank stated that remittances offer an additional economic lifeline, particularly in Central America, where remittances are 19.1% of their gross domestic product, GDP.

Remittances account for 26.8 % of Honduras’s GDP, 23.7% of El Salvador, 20.6% of Nicaragua, and 19.1% of Guatemala’s GDP.

World Bank’s Latin America Economic Outlook

The World Bank stipulates that the economy of Latin America and the Caribbean will grow 2% this year, a little more than expected but less than the other regions of the world.

The financial organization forecasted in April that the regional economy would grow 1.4% in 2023, a percentage that has risen in its latest outlook.

“Digital solutions can fuel growth, inclusion, and better governance in Latin America and the Caribbean,” stated the World Bank.