Guatemala Economic Forecast

Guatemala Economic Outlook

November 6, 2018

After accelerating in the second quarter thanks to strong domestic demand, the economy likely performed fairly well in Q3 due to the same drivers, with the average reading of the monthly economic activity index in July and August trending only slightly below the previous quarter’s reading. Moreover, private consumption should have been buttressed by strong remittances growth in the quarter, which reached their highest USD value on record in August, benefiting from continued robust momentum in the U.S. economy. In late October, S&P confirmed Guatemala’s credit rating as BB- with a stable outlook, due to a manageable fiscal shortfall, a low public debt ratio and an improving external position. However, the agency noted that political instability is hampering growth. Looking at Q4, floods and heavy rainfall in October could drag on economic activity somewhat.

Guatemala Economic Growth

Momentum in the economy is expected to edge up next year on the back of strong domestic demand. Private consumption is likely to benefit from a tight labor market and robust remittances inflows, while growth in government consumption and fixed investment should also accelerate. However, political risks are likely to increase in the build-up to next year’s presidential elections. FocusEconomics Consensus Forecast panelists expect the Guatemalan economy to expand 3.2% in 2019, which is unchanged from last month’s forecast, and 3.4% in 2020.

Guatemala Economy Data

Population (million)15.615.916.316.616.9
GDP per capita (USD)3,4633,6653,9384,1264,467
GDP (USD bn)54.058.464.068.475.6
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Fiscal Balance (% of GDP)-2.1-1.9-1.4-1.1-1.4
Public Debt (% of GDP)24.624.724.324.223.9
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Policy Interest Rate (%)
Exchange Rate (vs USD)7.847.607.637.527.35
Exchange Rate (vs USD, aop)7.867.747.667.607.35
Current Account (% of GDP)-2.6-2.1-
Current Account Balance (USD bn)-1.4-1.2-
Trade Balance (USD billion)-6.2-6.1-5.6-5.2-6.0
Exports (USD billion)
Imports (USD billion)16.417.116.415.817.1
Exports (annual variation in %)1.07.8-1.8-2.05.1
Imports (annual variation in %)3.84.3-4.1-3.98.5
International Reserves (USD)
External Debt (% of GDP)31.933.131.631.0-  

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Guatemala Facts

Exchange Rate7.720.22 %Nov 15

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