The Need for Investment Boost and Innovation in Central America

By Mayora IP

This year and next, the economy of Central America will stay mired in a trap of low capacity for growth, with a growth rate that will remain low and a growth dynamic that depends more on private consumption, and less on investment.

This is according to the Preliminary Overview of the Economies of Latin America and the Caribbean 2024, the last annual flagship report for 2024 released by the Economic Commission for Latin America and the Caribbean (ECLAC).

In 2025, Central America is seen growing 2.9%. According to the report, overcoming the trap of low capacity for growth will require a major mobilization of financial resources and the implementation of productive policies to boost investment and productivity.

"Implementing these new productive development policies calls for the coordination of action on many fronts. Priority areas include: science, technology and innovation; technology extension; digital transformation; support for entrepreneurship; closing of human talent gaps; financing over the whole life cycle of businesses; and attraction of investment, including foreign direct investment".

In Costa Rica, El Salvador, Guatemala and Honduras, an analysis of firm-level micro-data, an analysis of public programs and intermediary organizations to support entrepreneurship, focus groups, and an online survey of more than 2,000 firms on technology use, confirmed that businesses in the digital sector and high-tech manufacturing are more productive than others. Yet, such firms fase many challenges that make it difficult for small and medium enterprises (SMEs) to digitalize their operations and for start-ups in general.