Colorful city in Guatemala

Guatemala Economic Activity December 2021

Guatemala: Economic activity growth eases to 10-month low in December

Economic activity increased 3.0% year-on-year in December (November: +5.0% yoy). December’s result marked the weakest reading since February. The result was driven by the commerce and vehicle repair, manufacturing, construction, agricultural and financial sectors.

Data for the fourth quarter suggests that economic growth slowed notably from the third quarter, in part due to a tougher base of comparison. That said, the economy should have continued growing at a robust pace in the period. Moreover, a robust recovery in the United States should support the inflow of remittances, which will, in turn, buoy household spending ahead and drive economic growth in Guatemala.

Analysts at the EIU added:

“Guatemala’s rebound will slow to steadier rates of GDP growth later in the forecast period but, in the nearer term, there are still some gains from economic reopening and the huge inflows of workers’ remittances, mainly from the U.S. We envisage GDP growth of 4.7% in 2022 […]. It remains unclear whether the domestic economy would be capable of sustaining rapid growth if the U.S. economy were unexpectedly to weaken. Pandemic-related risks are also significant, as low vaccination rates leave the country vulnerable to the emergence of deadlier Covid-19 variants than Omicron (although no stringent new measures have been announced, even amid the spike in cases in January). A prolonged and significant deterioration in public health conditions could weaken consumer and business sentiment, although not as severely as in 2020, as the economy seems to have adapted to living with Covid-19.”

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