Macroeconomic Prospects of Select Latin American and Caribbean Economies, Forecasts to 2022
The report tracks the economies of Panama, Puerto Rico, Jamaica, Guatemala, Trinidad and Tobago, and Costa Rica. The report provides insights into the macroeconomic outlook for these countries, by covering GDP growth, inflation and interest rates, income, labor market, and population.
GDP growth is expected to remain more or less stable or increase over the forecast period for all the countries, barring Puerto Rico. Puerto Rico has been in a recession since 2005 and will have to cope with the effects of hurricane-led devastations in 2017 and 2018. The country is also challenged by bankruptcy and is not expected to be able to repay its $70 billion in debt until 2022. The economy of Panama is performing very well, with GDP growth expected to hover at 5.5% until 2022. Panama is in fact striving to transition to a high-income economy by 2021.
Panama and Puerto Rica have no central bank and, therefore, do not have monetary policy operations that influence interest rates. In Jamaica and Costa Rica, on the other hand, the key interest rate of the central bank is expected to decline and increase, respectively, in 2018. No change is expected in the key interest rates of the central banks of Guatemala and Trinidad and Tobago in 2018; consequently, interest rates on loans are not expected to see much variation.
Puerto Rico is expected to see an increase in its unemployment rate until 2020 amidst massive emigration and company closures. An accompanying steady fall in the labor force size of Puerto Rico is also expected. Most of the other economies are expected to see a decline in the unemployment rate over the forecast period, with the expected expansion of economic activities helping drive unemployment downward.
Population growth is seen to be slowing down across most of the economies. Puerto Rico is already experiencing a decline in its total population size, with a high incidence of migration from Puerto Rico to the US. The working age (15 to 64 years) population share is expected to expand across Panama, Jamaica, and Guatemala, over the forecast period. Especially at a time when the working age population size is shrinking across economies such as China and Japan, countries with a growing working population size could be prioritized by companies, when undertaking site-selection decisions, as this positive demographic trend is linked to benefits, such as a larger labor pool and higher consumer demand.
Key Issues Addressed
What are GDP growth prospects of the countries in focus and the key growth drivers and restraints?
What is the outlook for inflation?
How are monetary policy conditions and average interest rates expected to evolve?
Is the share of the middle class expected to increase?
What is the outlook for unemployment and the labor force size?
What are the trends for total population and population growth?
How is the working age population size expected to evolve?
Which countries will have to cope with a rising elderly population share?
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