Guatemala: Economic growth accelerates in Q3 2019
Economic growth accelerated to 4.0% year-on-year in the third quarter of 2019, up from 3.5% in the second quarter and marking the third consecutive quarter of stronger economic growth. The print reflected strengthening domestic demand offsetting a larger drag from the external sector.
Domestic demand grew at a strong 4.7% year-on-year in the quarter (Q2: +3.7% year-on-year); however, this was mainly due to a surge in total investment, which more that quintupled in the quarter. Private consumption growth remained robust and matched the prior quarter’s 3.9% expansion in the three months ending in September, partly on the back of stronger growth in remittances and softening inflationary pressures. Meanwhile, fixed investment growth edged down to 3.8% (Q2: +3.9% yoy) and growth in government consumption slumped to 3.0% (Q2: +3.7% yoy).
On the external front, net exports were a greater drag on the economy in the third quarter amid a jump in import growth. Imports of goods and services rose 5.8% year-on-year, well above the 2.4% increase logged in the second quarter. Meanwhile, exports increased 2.3% in the quarter, up from the 0.4% increase recorded in the second quarter.
Looking ahead, economic growth should keep a broadly similar pace this year on the back of an improving external sector and robust domestic demand. Yet the balance of risks is tilted to the downside and hinges on uncertainty surrounding the United States’ immigration policy, which could dent crucial remittances, and a challenging external backdrop despite some progress being made in the Sino-American trade spat.