The economy of Central America is the eleventh-largest economy in
Latin America
Latin America or
* french: Amérique Latine, link=no
* ht, Amerik Latin, link=no
* pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived f ...
, behind
Brazil
Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
,
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
,
Argentina
Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the second-largest country in South America after Brazil, th ...
and
Colombia
Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
. According to the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
, the nominal GDP of Central America reached 204 billion
US dollar
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
in 2010, as recovery from the
crisis of 2009, where
gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
(GDP) suffered a decline to 3.8%. The major economic sectors are
agriculture
Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people to ...
and
tourism
Tourism is travel for pleasure or business; also the theory and practice of touring (disambiguation), touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tour (disambiguation), tours. Th ...
, although the industrial sector has shown strong growth, mainly in
Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
.
The
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
is the main socio-commercial of all
Central America
Central America ( es, América Central or ) is a subregion of the Americas. Its boundaries are defined as bordering the United States to the north, Colombia to the south, the Caribbean Sea to the east, and the Pacific Ocean to the west. ...
n countries. Other important socio-commercial countries in Central America are the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
,
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
,
Dominican Republic
The Dominican Republic ( ; es, República Dominicana, ) is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean region. It occupies the eastern five-eighths of the island, which it shares wit ...
and
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
. Currently, the Central American
bloc is based on a bilateral
free trade agreement
A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occur ...
(
FTA) with the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
known as
CAFTA-DR, and another in negotiations with
Peru
, image_flag = Flag of Peru.svg
, image_coat = Escudo nacional del Perú.svg
, other_symbol = Great Seal of the State
, other_symbol_type = Seal (emblem), National seal
, national_motto = "Fi ...
. The
Panama Canal
The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The canal cuts across the Isthmus of Panama and is a conduit ...
is the connection of Central America with the rest of the world, and the main means of communication for trade with Central America,
South America
South America is a continent entirely in the Western Hemisphere and mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere at the northern tip of the continent. It can also be described as the southe ...
, United States,
Europe
Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
and
Asia
Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa. Asia covers an area ...
.
The economic development of
Central America
Central America ( es, América Central or ) is a subregion of the Americas. Its boundaries are defined as bordering the United States to the north, Colombia to the south, the Caribbean Sea to the east, and the Pacific Ocean to the west. ...
is the middle level, although competitiveness is remarkable:
*
Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by H ...
: Is the largest economy in Central America and the tenth largest in Latin America, based on nominal GDP ($118,655 million)
[Report for Selected Countries and Subjects](_blank)
International Monetary Fund. and GDP
purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
(PPP) of $81.51 billion (2013 data). It maintains strong commercial relations mainly with the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
,
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
,
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
,
Dominican Republic
The Dominican Republic ( ; es, República Dominicana, ) is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean region. It occupies the eastern five-eighths of the island, which it shares wit ...
,
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
and
Korea
Korea ( ko, 한국, or , ) is a peninsular region in East Asia. Since 1945, it has been divided at or near the 38th parallel, with North Korea (Democratic People's Republic of Korea) comprising its northern half and South Korea (Republic o ...
. According to the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
, Guatemala has a stable economy. Guatemala has one of the lowest GDP per capita in the region
*
Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
: Besides having the highest
Human Development Index
The Human Development Index (HDI) is a statistic composite index of life expectancy, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income indicators, whi ...
(HDI) in the region, Panama is the fastest growing economy in Latin America, having grown 6.2% in 2014. Panama has the highest GDP per capita in the region. Panama is recognized as the most industrial country in Central America, and the second in Latin America after
Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
. It has strong business relationships and treaties with the United States,
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
,
Colombia
Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
,
Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
,
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
and
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
.
*
Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
: Has the third-largest in the region and has more trade relations then many Central American countries, mainly with the United States, Singapore, the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
, Mexico, Chile, China, CARICOM (
Caribbean Community
The Caribbean Community (CARICOM or CC) is an intergovernmental organization that is a political and economic union of 15 member states (14 nation-states and one dependency) throughout the Caribbean. They have primary objectives to promote econom ...
), among others countries. Politically, Costa Rica is the most stable country in Central America.
*
El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south b ...
: According to the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
, El Salvador is the fourth-largest
economy
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
in the region, and has a GDP PPP of $50,903 million.
The
Salvadoran economy grew by 3% in 2010, after a strong contraction in 2009.
[Perspectivas del FMI sobre Centroamérica](_blank)
Retrieved: 25/07/2015.
*
Honduras
Honduras, officially the Republic of Honduras, is a country in Central America. The republic of Honduras is bordered to the west by Guatemala, to the southwest by El Salvador, to the southeast by Nicaragua, to the south by the Pacific Oce ...
: Is the second-poorest country in Central America, with 60% living in poverty according to the
CIA World Factbook
''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is available ...
. In percentage, Honduras has the largest
cheap labor
Global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business (such as environmental regulations) is inex ...
in Central America, its economy is mainly agricultural, the main export products are
rice
Rice is the seed of the grass species ''Oryza sativa'' (Asian rice) or less commonly ''Oryza glaberrima
''Oryza glaberrima'', commonly known as African rice, is one of the two domesticated rice species. It was first domesticated and grown i ...
,
coffee
Coffee is a drink prepared from roasted coffee beans. Darkly colored, bitter, and slightly acidic, coffee has a stimulant, stimulating effect on humans, primarily due to its caffeine content. It is the most popular hot drink in the world.
S ...
,
banana
A banana is an elongated, edible fruit – botanically a berry – produced by several kinds of large herbaceous flowering plants in the genus ''Musa''. In some countries, bananas used for cooking may be called "plantains", distinguis ...
s,
vegetable
Vegetables are parts of plants that are consumed by humans or other animals as food. The original meaning is still commonly used and is applied to plants collectively to refer to all edible plant matter, including the flowers, fruits, stems, ...
s, and other products.
*
Nicaragua
Nicaragua (; ), officially the Republic of Nicaragua (), is the largest country in Central America, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Managua is the cou ...
: Is the least stable country in the region, and the second-poorest in the hemisphere after
Haiti
Haiti (; ht, Ayiti ; French: ), officially the Republic of Haiti (); ) and formerly known as Hayti, is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean Sea, east of Cuba and Jamaica, and ...
. Nicaragua has the lowest HDI in the region, and has the lowest minimum wage in Central America (USD $141). Nicaragua receives financial assistance as 4 out of 10 people live on less than a dollar a day, according to the
United Nations Development Programme
The United Nations Development Programme (UNDP)french: Programme des Nations unies pour le développement, PNUD is a United Nations agency tasked with helping countries eliminate poverty and achieve sustainable economic growth and human dev ...
. Nicaragua is integrated into the Bolivarian Alliance for the Peoples of Our America (
ALBA
''Alba'' ( , ) is the Scottish Gaelic name for Scotland. It is also, in English language historiography, used to refer to the polity of Picts and Scottish people, Scots united in the ninth century as the Kingdom of Alba, until it developed i ...
).
Currency by country
Each country has its own national
currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
, with the exception of
El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south b ...
, where the
US dollar
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
was taken as currency in the country as of January 1, 2001, replacing the
Salvadoran colón
The colón was the currency of El Salvador from 1892 until 2001, when it was replaced by the U.S. dollar during the presidency of Francisco Flores. The colón was subdivided into 100 centavos and its ISO 4217 code was SVC. The plural is "''colon ...
. El Salvador will also make
Bitcoin
Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
an official currency beginning on September 7, 2021. Belize is a country where the dollar circulates, but of Belizean type. In the case of Panama, two types of currency are in use, the
Panamanian balboa
The balboa (sign: B/.; ISO 4217: PAB) is, along with the United States dollar, one of the official currencies of Panama. It is named in honor of the Spanish explorer/conquistador Vasco Núñez de Balboa. The balboa is subdivided into 100 ''centé ...
and the US dollar. The Balboa is pegged to the US dollar 1:1, is issued only in coin form, and is subdivided into 100 centésimos. For all practical purposes the currency of Panama is the US dollar.
Gross domestic product by country (2012)
Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by H ...
has the highest
gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
in Central America, followed by
Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
,
Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
and
El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south b ...
. The GDP data are based on data from the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
corresponding to 2012. The rates of economic growth come from the
CIA World Factbook
''The World Factbook'', also known as the ''CIA World Factbook'', is a reference resource produced by the Central Intelligence Agency (CIA) with almanac-style information about the countries of the world. The official print version is available ...
.
Exports and imports
Regarding exports and imports, the balance is negative in the region, each country consumes more than it produces. The main products that the region exports are
agricultural
Agriculture or farming is the practice of cultivating Plant, plants and livestock. Agriculture was the key development in the rise of Sedentism, sedentary human civilization, whereby farming of Domestication, domesticated species created food ...
type (cocoa, coffee, rice, flowers, etc.), the largest purchaser is the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
. While on the other hand, the region imports
nontraditional products (cars, appliances, electronics, etc.) and the main seller is United States.
Foreign direct investment
According to the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
,
Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
,
Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
and
Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by H ...
are the countries that receive more
foreign direct investment
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
in Central America, and exceeded one billion US dollars. The next table shows the values in dollars, and investment growth between 2010 and 2014:
Banking
Bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
ing is one of the main economic activities in Central America, which takes place mainly in
Panama
Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Cos ...
,
El Salvador
El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south b ...
and
Costa Rica
Costa Rica (, ; ; literally "Rich Coast"), officially the Republic of Costa Rica ( es, República de Costa Rica), is a country in the Central American region of North America, bordered by Nicaragua to the north, the Caribbean Sea to the no ...
. Since 2010,
Guatemala
Guatemala ( ; ), officially the Republic of Guatemala ( es, República de Guatemala, links=no), is a country in Central America. It is bordered to the north and west by Mexico; to the northeast by Belize and the Caribbean; to the east by H ...
,
Honduras
Honduras, officially the Republic of Honduras, is a country in Central America. The republic of Honduras is bordered to the west by Guatemala, to the southwest by El Salvador, to the southeast by Nicaragua, to the south by the Pacific Oce ...
and
Nicaragua
Nicaragua (; ), officially the Republic of Nicaragua (), is the largest country in Central America, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west. Managua is the cou ...
have developed strong growth of the banking. Regarding financial centers, El Salvador and Panama are the only Central American countries that have a
World Trade Center
World Trade Centers are sites recognized by the World Trade Centers Association.
World Trade Center may refer to:
Buildings
* List of World Trade Centers
* World Trade Center (2001–present), a building complex that includes five skyscrapers, a ...
.
The economist magazine ''American Economy'' published its ranking "The 250 best banks in Latin America," presented the list of the 42 Central American banks included.
Within the Latin American general ranking, the
first Central American Bank is the number 39 in the list, and it is the
HSBC Panama in
Panama City
Panama City ( es, Ciudad de Panamá, links=no; ), also known as Panama (or Panamá in Spanish), is the capital and largest city of Panama. It has an urban population of 880,691, with over 1.5 million in its metropolitan area. The city is locat ...
.
Within the first 100 places in the general ranking of ''Amperica Economy'', 7 Central banks appears: HSBC Panama ranked 39th,
General of Panama at 42,
National Panama (57),
National of Costa Rica (70),
Bladex
Banco Latinoamericano de Comercio Exterior, S.A. (English: Foreign Trade Bank of Latin America, known as Bladex, its commercial trademark) is a multinational bank. Founded in 1977 as Banco Latinoamericano de Exportaciones, S.A. and renamed in June ...
of Panama (75),
Agricultural Bank of El Salvador (85) and
Costa Rica Bank of Costa Rica (92).
Ranking de Bancos de Centroamérica
The Economist magazine ''American Economy''. Retrieved: 25/07/2015.
See also
* Central America
Central America ( es, América Central or ) is a subregion of the Americas. Its boundaries are defined as bordering the United States to the north, Colombia to the south, the Caribbean Sea to the east, and the Pacific Ocean to the west. ...
References
{{DEFAULTSORT:Economy Of Central America
Central America
fr:Économie de l'Amérique latine