Central America Market Overview

Market Overview

The Americas Society & Council of Americas (ASCOA) reported on January 17, 2025, that Central America’s Gross Domestic Product (GDP) growth hit 2.4% in 2024, according to the International Monetary Fund’s January 2025 update of their World Economic Outlook report. The Economic Commission for Latin America and the Caribbean (ECLAC) also reached a similar, slightly lower conclusion, in its preliminary overview report of the region’s economies: 2.2% growth for 2024. 

While the report notes that Latin America has been in a “trap of low growth capacity” over the last decade, with an average growth rate of 1% annually, the growth in 2024 was slightly higher than what ECLAC originally projected for the year—1.9%. In 2025, GDP growth across the region is projected to be slightly higher, at 2.5% according to the IMF and 2.4% according to ECLAC. That’s lower than the IMF’s 2025 global GDP growth projection of 3.3%. 

Although growth has been gradual, there is good news for the region’s economy: the IMF’s World Economic Outlook says that inflation rates across the region have “dropped significantly from their peaks” and continue to decrease. Unemployment in the region is also at historically low levels. 

Countries included in this regional assessment include Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua, and Panama. The U.S. has two Free Trade Agreements (FTAs) with all of these countries. The Dominican Republic-Central America FTA (CAFTA-DR) is the first free trade agreement between the U.S. and a group of smaller developing economies: U.S.’s Central American neighbors Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, as well as the Dominican Republic. It entered into force on a country by country ratification between 2006 and 2009. The U.S.-Panama Trade Promotion Agreement or “USPTPA” entered into force in October of 2012.  

These markets and most countries within this region share the following characteristics: There is a strong preference for U.S. products; Importers like doing business with U.S. exporters because they are viewed as reliable and trustworthy; the majority of the populations perceive U.S. products as higher quality and safer than local foods and other products from Central America. In most cases, U.S. products have strong name recognition and set the standard for the competition. Supermarket and hypermarket chains are expanding into multiple markets in the region. Local representation is important and personal, direct contact is seen as critical in doing business in this region.  

Importers may also be wholesalers and have national and in many case multinational distribution. Most of the markets are small in size and consolidation of less-than-container-load (LCL) shipments is important, often using freight forwarders or consolidators out of the ports of Miami. Brand promotion and advertising are widely used to build brand recognition. It is recommended that U.S exporters support their importers/distributors/agents with promotional funds. Since consumers are familiar with U.S. products, it is that much more important for companies to provide samples of unknown products to consumers to build brand awareness and preference. Effective market promotion can overcome price sensitivity and retailers are open to this and will readily participate. 

Central American markets also import significant amounts of U.S. processed foods as well. In 2023 the total was nearly US$2 billion, which was a decline of 4% from the prior year. In 2024 U.S. exports of processed foods to Central America have grown 11% to well over US$2.2 billion, and a new record high.  

Top U.S. processed food exports to the region in 2023 included:

• Food Preparations and Ingredients 
• Processed/Prepared Dairy Products 
• Processed Vegetables and Pulses 
• Prepared/Preserved Meats 
• Alcoholic Beverages 
• Condiments, Sauces, Jams, and Jellies 
• Snack Foods 
• Non-Alcoholic Beverages