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New Market Study Published: Central America Agribusiness Report Q4 2012

Fast Market Research recommends "Central America Agribusiness Report Q4 2012" from Business Monitor International, now available


Boston, MA -- (SBWIRE) -- 01/16/2013 -- Adverse weather conditions continued to affect Central American agricultural producers through Q312, signalling the ongoing threat of unpredictable and extreme climactic factors to our outlooks for the region. Guatemala's corn and bean crops have been hard hit by persistent drought conditions through 2012, posing a significant threat to the food security of more than 50,000 families.

Central America has also been hit hard by the increase in price of staples such as corn and beans, caused primarily by the droughts in the US. However, the Inter-American Institute for Cooperation on Agriculture has moved to alleviated concerns that the situation may lead to a food crisis in the region of the magnitude of 2007-2008. The institute has stressed that it considers the phenomenon to be temporary and limited to three crops, corn, soybeans and wheat. The recent trend does, however, highlight the vulnerability of Central American agribusiness to commodity price fluctuations. Central American coffee producers are currently struggling to adapt to the steep fall in coffee revenues since prices peaked in April 2011.

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Key Forecasts

- The region's economic trajectory remains highly divergent. We have increased our forecasts for Panama's real GDP growth rates to 9.1% year-on-year (y-o-y) in 2012 and 8.0% in 2013. However, the government's recent decision to raise its deficit ceiling is likely to see the country's fiscal deficit increase to 2.4% in 2012 and 2.1% in 2013. Panama's economy remains strong in comparison with other countries in the region. El Salvador's economic outlook continues to deteriorate on the back of weak private consumption and we forecast GDP growth of 1.5% in 2012 and 2.2% in 2013.
- Demand for sugar in Central America is estimated to have increased by 1.2% y-o-y in 2010/11 to 1.91mn tonnes. Growth was strongest in Nicaragua at 3.4% y-o-y. In 2011/12, we see demand growing by 4.1% y-o-y to 1.98mn tonnes, as nominal GDP grows across the region, with Honduras seeing the fastest expansion at 14.0% y-o-y. We see growth slowing to 1.5% y-o-y in 2012/13, with demand levels diverging across the region: from a 1.1% y-o-y decline in Guatemala, to an 8.0% y-o-y increase in Honduras. Over our forecast period to 2016, we see regional demand growth increasing by 10.0% on the 2011 level to 1.99mn tonnes. Growth is forecast to be strongest in Nicaragua and Honduras, at 16.9% and 28.5%, respectively.

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