## Potential Output Growth Estimates for Central America and the Dominican Republic

_IMF Working Papers, December 23, 2016_

## Source details

**Canonical URL:** [Potential Output Growth Estimates for Central America and the Dominican Republic](https://www.imf.org/en/publications/wp/issues/2016/12/31/potential-output-growth-estimates-for-central-america-and-the-dominican-republic-44495)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/potential-output-growth-estimates-for-central-america-and-the-dominican-republic-44495/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/potential-output-growth-estimates-for-central-america-and-the-dominican-republic-44495/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/potential-output-growth-estimates-for-central-america-and-the-dominican-republic-44495/bundle-manifest.json)

## Bibliographic details
- Authors: Roberto Garcia-Saltos, Fan Zhang, Iulia Ruxandra Teodoru
- Published: December 23, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475563153.001

---

### Summary findings
- The paper presents estimates of potential output for all Central American economies.
- Potential output growth has declined in recent years in most economies of Central America.
- Lower capital accumulation and TFP growth are accounting for most of this decline.
- Apart from Costa Rica, there are no indications of significant economic slack in 2015 in Central America.
- Looking forward, potential growth in most Central American economies is expected to continue at an average of 4 percent in the medium-term due to structural constraints to capital and employment growth, and low TFP growth.
- Increasing potential growth should be a policy priority.

### Drivers of the decline in potential output
- Lower capital accumulation.
- Lower total factor productivity (TFP) growth.
- Structural constraints to capital and employment growth.
- Low TFP growth limiting medium-term potential.

### Economic slack and cyclical conditions
- No indications of significant economic slack in 2015 in Central America, with the sole exception of Costa Rica.

### Medium-term projections and scenarios
- Potential growth in most Central American economies is expected to continue at an average of 4 percent in the medium-term.

### Policy recommendations
- Structural reforms must be directed at:
  - Improving business conditions.
  - Improving product markets.
  - Improving labor markets.
  - Enhancing the capacity for innovation.

---

## Content in this bundle

- **Potential Output Growth Estimates for Central America and the Dominican Republic**
  - [Potential Output Growth Estimates for Central America and the Dominican Republic (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2016/_wp16250.pdf.md){rel="alternate" type="text/markdown"}
  - [Potential Output Growth Estimates for Central America and the Dominican Republic (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2016/_wp16250.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/potential-output-growth-estimates-for-central-america-and-the-dominican-republic-44495_