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Guatemala Economic Activity August 2021

Guatemala: Economic activity growth eases to six-month low in August

Economic activity rose 7.6% compared to the same month a year earlier in August, which followed July’s 11.3% increase. August’s figure marked the worst reading since February on the back of a less favorable base effect. The reading nonetheless reflected robust growth in the trade and repair of vehicles, manufacturing; health care; food; and financial services sectors.

Meanwhile, annual average growth in economic activity rose to 7.3% in August from 6.6% in July. August’s reading marked the best result since current records began in 2014.

Analysts at the EIU added:

“Guatemala is experiencing a solid V-shaped recovery, buoyed by record inflows of workers’ remittances from abroad. Growth in recent quarters has been faster than anticipated […], and we expect the economy to return to 2019 output levels this year. After real GDP contracted by 1.5% in 2020, we forecast a robust recovery of 5.4% in 2021. […]  There are still risks to Guatemala’s medium-term recovery, as it remains unclear whether the domestic economy will be capable of sustaining rapid growth itself if the US economy were to weaken, particularly given that stimulus is being withdrawn in Guatemala. Pandemic-related risks are also significant, as low vaccination rates imply that the public health crisis is far from over. A prolonged and significant deterioration in the public health situation has the potential to weaken consumer and business sentiment, although not as severely as in 2020, as the economy seems to have adjusted to the likelihood of renewed waves of the virus.”

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