Running Out of Tailwinds: Opportunities to Foster Inclusive Growth in Central America and the Dominican Republic

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Feb 2017
Prat, Jordi;Solera, Marco
The macroeconomic context of Central America and the Dominican Republic has been characterized by positive perspectives. The economic recovery of United States, lower commodity prices, and the low and stable international interest rates were the main determinants of this behavior. However, even though the recent economic forecast for United States has been positive, the last three years updates have suffered downward adjustments. The economic integration with the rest of the world, can exposure the region to international context changes. It is worth to mention that the world economic perspectives, the increasing in trade aversion, changes in commodity prices, as well as Federal Reserve decisions regarding interest rates, are some of the variables that would impact the region economic perspectives. Thus, taking advantage of lower energy prices could benefit the households¿ disposable income and firms costs, and these in turn, economic growth. On the other hand, the region could take advantage of its relative young population, the population shift could by itself, increase the economic dynamic, but it can also be maximized through transversal policies, in which future workers are trained with the necessary tools to enhance their productivity, with the idea to insert them in high added value employment.