Fastest-Growing Region in Americas Is Loving the Oil Slumpby
Fuel-importing Central American nations outpacing neighbors
Remittances and tourism have increased as US economy improves
The slump in raw materials prices that has hurt Brazil, Chile, Peru and Colombia is leaving Central America unscathed.
The region is bucking a trend of sluggish growth in the rest of Latin America as cheaper crude prices cut its fuel bills and faster growth in the U.S. boosts remittances and tourist spending. The region will grow 4.2 percent this year, led by Panama’s 6.3 percent expansion, according to forecasts from the International Monetary Fund. That compares to a forecast of a 0.3 percent contraction for Latin America and the Caribbean as a whole while Brazil, the region’s biggest economy, is set to shrink 3.5 percent.
All seven Central American nations count the U.S. as their biggest trading partner, while Brazil, Peru and Chile all do more business with China. Cooling demand in the Asian giant has contributed to falling prices for South America’s oil, iron ore, copper and soy. As a net importer of oil and most other raw materials, Central America is a net winner from falling commodities prices.
“Their fortunes are really tied more to the U.S. than to China,” JPMorgan Chase & Co emerging market analyst Franco Uccelli said in a phone interview. “They aren’t seeing some of the perils of being an oil exporter with oil trading as low as it is today.”
Remittances sent home to Guatemala by workers living in the U.S. and elsewhere rose 18 percent in January from the year earlier. The country, which has the largest economy is Central America, had received a record $6.3 billion in remittances last year, equivalent to about 10 percent of gross domestic product.
Further south, Costa Rica received a record 2.7 million tourists in 2015 generating $2.9 billion in revenue, according to the country’s tourism board.