ABSTRACT
This chapter considers the macroeconomic performance of the Central American region and in doing so to understand why immediate prospects are so dismal. It also considers the most important macroeconomic trends then elaborating each in turn with reference to available data. The instability of economic growth can be as depressing to private investment as slow growth. Economic instability, declining investment, and capital flight have placed great pressure on the balance of payments of the Central American countries and made debt service increasingly difficult. All the economies of the region are growth-constrained by debt service. Along with economic instability, falling living standards, and increased foreign debt has gone the collapse of the regional integration project. As the Central American economic crisis has deepened and the economies have settled into low-level stagnation, governments in the region have placed less and less practical importance on regional cooperation.
