27 January 2023

The World Bank has warned that the Northern Triangle of El Salvador, Guatemala and Honduras face economic difficulties. According to analysts, El Salvador and Honduras faced 2022 with negative growth rates of 8-9%, with Guatemala’s around 2%. Should a worldwide recession become a reality, investment would be more complicated and the cost of debt increase. Any problem with the US’s economy would be felt in Central America through lower demand for exports and a possible fall in remittances. However, remittances have remained record breaking during the pandemic and any export decrease could be offset by nearshoring. Guatemala’s macroeconomic stability is offset by limited public investment and El Salvador’s ability to cover a US$800mn loan payment suggests cause for regional optimism.

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