This DEBrief summarizes the main findings of the IDB Invest study: The Effect of COVID-19 on Firms and Employment in Central America. Our analysis shows that since the COVID-19 outbreak, 1 in 4 formal businesses in El Salvador, Guatemala, Honduras and Nicaragua have closed, with monthly sales dropping by a third on average across countries.

To counter the impact of the crisis, firms opted to decrease total hours worked, reduce wages or furlough workers. Despite increases in public spending and policies to mitigate the economic and social impacts of the pandemic, few formal firms received government assistance.