Central America Country Risk Report Q2 2015 - New Study Released

External Tailwinds Supporting Regional Underperformers

Core View

Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook, though we believe the country is more likely to embrace fiscal consolidation after a recent sovereign credit rating downgrade by Moody's.

In contrast, our outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their manufactured goods, rising remittance inflows and lower oil prices in the quarters ahead. That said, significant security risks will temper foreign direct investment into these countries over the next five years. Nicaragua's macroeconomic position is also especially vulnerable given its strong ties to Venezuela. Our core view is for a moderate slowdown in growth in the coming years due to an end to the Tariff Preference Level programme and our view that Venezuela will modestly reduce assistance to Nicaragua. However, if Venezuela were to suddenly cut off aid under the ALBA-TCP programme, this would see a sharp downturn in Nicaraguan growth and rising pressure on the country's macroeconomic buffers.

Full Report Details at
- http://www.fastmr.com/prod/974362_central_america_country_risk_report_q2_2015.aspx?afid=301

Major Forecast Changes

* We anticipate Costa Rica will see fiscal consolidation in the coming years, after a recent credit downgrade by Moody's has prompting policymakers from across the political spectrum to declare support for shoring up the country's fiscal accounts. After the country posted its largest fiscal deficit on record in 2014, at 5.9% of GDP, we expect the shortfall will shrink to 5.1% of GDP in 2015 and 4.4% in 2016
* We have revised...

The Central America Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's economic, political and financial prospects through end-2019, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of Panama, Guatemala, Nicaragua, El Salvador, Costa Rica, Honduras's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.

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