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Guatemala Economic Activity July 2021

Guatemala: Economic activity growth loses steam in July on a less favorable base effect

Economic activity increased 10.6% in July over the same month a year prior, cooling somewhat from the 13.9% increase recorded in June. The softer pace of growth at the outset of the third quarter reflected a less favorable base effect, as the impact of Covid-19 eased in the same month a year prior. That said, growth in activity was buoyed by the trade and repair of vehicles and the manufacturing sectors.

Meanwhile, annual average growth in economic activity rose to 6.6% in July from 5.4% in June. This marked the highest print since current records began in 2014.

Analysts at the EIU added:

“We forecast a robust recovery of 4.0% in 2021. This mainly reflects rapid growth in the U.S. and particularly the impact of U.S. government stimulus on remittances. Although this is currently boosting performance, there are 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be capable of sustaining rapid growth itself if the U.S. economy weakened, particularly given that stimulus is being withdrawn in Guatemala.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.”

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