Guatemala: GDP growth accelerates in the first quarter
GDP reading: The economy started the year on a stronger footing, with GDP expanding 3.3% year on year in the first quarter (Q4 2023: +2.0% yoy).
Drivers: Domestically, the upturn was largely underpinned by faster household spending growth, which clocked a two-and-a-half-year high of 6.4% in the first quarter (Q4 2023: +4.7% yoy). Lower inflation in Q1 compared to the prior quarter, paired with a robust increase in remittances inflows, supported household budgets at the outset of 2024. Additionally, public spending slid at a milder rate of 1.7% in Q1 (Q4 2023: -9.5% yoy). Less positively, fixed investment growth moderated to 2.5% in Q1, following the 6.2% recorded in the prior quarter.
On the external front, exports of goods and services declined at a slower pace of 3.2% in Q1 (Q4 2023: -5.3% s.a. qoq). Meanwhile, imports of goods and services growth sped up to 13.2% in Q1 (Q4 2023: +11.3% yoy), marking the quickest pace in over two years.
GDP outlook: Our panelists expect economic growth to have slowed mildly in the second quarter but forecast an overall robust expansion for 2024, chiefly underpinned by a rebound in exports of goods and services. Meanwhile, domestic demand is set to lose some steam compared to 2023 levels, driving GDP growth slightly below last year’s 3.5% and the prior-decade average of 3.6%.
Panelist insight: Analysts at the EIU commented:
“We expect inflows of remittances to remain strong over the remainder of 2024, underpinning our forecast for economic growth of 3.4% this year. The main risk to this forecast stems from weaker than expected growth in the US in the second half of the year.”