CentAm: The Inevitable Squeeze

BMI View: It is becoming evident to us that Central America will suffer a sharp deceleration in economic growth in 2009, to 2.8% from a projected 4.3% in 2008, as the region finds it increasingly difficult to shrug off the adverse consequences of the ongoing US recession. The drying up of remittances and foreign capital inflows - which have been the lifeblood of domestic demand in recent years - will hit economic growth hard, as will a weaker export performance, although increased public expenditure should prevent the regional economy from contracting.

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