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

By Eddie Galdamez  | Updated on Jan 15th, 2024

The 2024 World Bank Central America Economic Outlook has been released; Panama, with a 4.6% projected economic growth, leads the economic outlook in Central America, followed by Costa Rica’s 3.9% projected increase.

Guatemala ranks third in the region with a 3.5% projection, followed by Honduras and Nicaragua with a similar 3.2% economic growth.

El Salvador is at the bottom of the World Bank’s growth projections for the region, with a 2.3% estimated growth, almost one percent lower than both Nicaragua and Honduras.

World Bank Central America Economic Outlook
2020 2021 2022 2023 2024 2025
Panama -17.7 15.8 10.8 4.9 4.6 5.3
Costa Rica -4.3 7.8 4.3 5.2 3.9 3.6
Guatemala -1.8 8.0 4.1 3.4 3.5 3.5
Honduras -9.0 12.5 4.0 3.2 3.2 3.4
Nicaragua -1.8 10.3 3.8 3.1 3.2 3.5
El Salvador -7.9 11.2 2.6 2.8 2.3 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 2024. Furthermore, they also agree that the Salvadoran economy will have the lowest economic growth in 2024.

According to the World Bank, Growth in Central America is expected to remain broadly steady, at 3.7 percent in 2024 and 3.8 percent in 2025.

For Central America, steady growth is envisioned, with rates of 3.7 percent in 2024 and 3.8 percent in 2025. This outlook is supported by a moderate increase in remittances, particularly in 2024. World Bank.

World Bank’s Latin America Economic Outlook

As per Latin America’s economic outlook, the World Bank suggests a gradual recovery, with growth projected to increase to 2.3 percent in 2024 and 2.5 percent in 2025.

Although the lasting effects of prior monetary tightening will persist in shaping short-term growth in 2024, their influence is projected to wane, according to the World Bank.

Furthermore, it stipulates that with a deceleration in inflation, central banks are anticipated to decrease interest rates, easing impediments to investment growth in Latin America.

The World Bank also noted that the region faces persistent challenges in the long run.

“Escalating geopolitical tensions, especially in the Middle East, could disrupt energy markets and cause oil prices to surge. Extreme weather events, intensified by climate change, present additional risks, particularly to climate-sensitive sectors such as agriculture, energy, and fishing,” documented the WB report.