Guatemala: Economy accelerates in 2018
Although data for the fourth quarter has yet to be released, preliminary estimates from the Central Bank showed that economic growth accelerated to 3.0% in 2018 from 2.8% in the prior year.
The pick-up in pace was chiefly buttressed by firmer domestic demand. Private consumption increased rapidly to 4.2% in 2018, up noticeably from 3.6% in 2017, thanks to easing inflationary pressures, low borrowing costs and sturdy inflows of remittances from workers abroad. Moreover, growth in public expenditure more than doubled from the previous year (2018: +3.5%; 2017: +1.5%), while fixed investments also increased 3.5% (2017: +3.1%).
The external sector’s performance was a mixed bag in 2018. Exports of goods and services logged a hefty 5.2% contraction, contrasting 2017’s 2.1% expansion and representing the first fall in nine years. On the other hand, imports of goods and services rose 4.0% in 2018 over the year prior, which is up noticeably from the 2.3% expansion in 2017. The pick-up in imports further highlights stronger domestic demand.
Looking ahead, the Guatemalan economy is projected to grow at a similar pace this year on further growth in public expenditure and fixed investment. Conversely, private consumption is seen losing some momentum as the U.S. economy moderates owing to the effect it will likely have on remittances, a largely proportion of which originate from the United States and an important source of income.