23 March 2026

In 2026, Central American economies will show moderate growth, according to the latest IDB forecast. Despite this resilience, the subregion faces fiscal challenges. Panama recently improved its fiscal position through strong income growth, while Guatemala experienced a deterioration driven by higher expenditures but still managed to increase tax revenue by 9.1%. A critical stabilizer for Central America is the steady inflow of remittances. To sustain long-term growth, the region must address low productivity and the need for digital skill development. The IDB plans to invest a record US$500 bn in Latin America and the Caribbean over the next ten years as it recognizes the advances in the reduction of poverty and the decrease in regional risk.

Source: Central America Briefing | Vol 14, Issue 6