Most of Central America reached its economic nadir in 1932, although in Honduras and Nicaragua economic decline continued until 1936/7. The fall in economic activity during the 1929 depression was severe and proved too great a challenge for the liberal oligarchic state, which was replaced throughout the region by authoritarian caudillismo. The new régimes, mostly sympathetic to the rise of fascism in Europe, brought to a swift end the apertura in the political process which had been apparent in the second half of the 1920s. Even in Costa Rica, Communist deputies – democratically elected – were banned from taking their seats during the presidency of León Cortés (1936–40). Trade union activity was sharply curtailed and many rural labour organisations were banned. This political reaction was mirrored by a commitment to the export-led model, in which the state intervened more directly on behalf of the traditional export interests. The export sector, however, in Central America was largely stagnant in the 1930s despite state intervention on its behalf.

With political repression on a massive scale, stagnation in the traditional export sector and an unwillingness on the part of the authorities to countenance an alternative to the export-led model, the decade of the 1930s has not surprisingly earned a reputation as the dark age of Central American history. Yet, in several countries, economic recovery was rapid after 1932. The mechanism of recovery was in part similar to that which occurred in other Latin American countries. The collapse of the gold standard brought to the fore the question of exchange rate management.