Guatemala: Economic growth eases slightly in Q4 2019 but stays solid
The economy expanded 3.9% year-on-year in the fourth quarter of last year, slightly down from the prior quarter’s upwardly revised 4.1% increase (previously reported: +4.0% year-on-year). The print reflected softening domestic demand offsetting a smaller drag from the external sector.
Domestic demand increased 4.7% year-on-year in the fourth quarter, down from the third quarter’s 5.1% increase. This mainly reflected noticeably softer growth in government consumption (Q4: +3.9% year-on-year; Q3: +5.0% yoy) and a small reduction in fixed investment growth (Q4: +7.1% yoy; Q3: +7.4% yoy) as private consumption growth was stable at 4.3%.
On the external front, net exports remained a drag on the economy, albeit to a smaller extent compared to the third quarter. Exports of goods and services swung from a 0.4% contraction in Q3 to a 3.3% increase in Q4, while growth in imports strengthened from 5.2% in the third quarter to 6.7% in the fourth.
Looking ahead, the economy is expected to shrink this year amid the economic fallout from the Covid-19 pandemic, which will weigh heavily on domestic and external demand. Moreover, a recession in the U.S. will hit remittance inflows, a key source of income for Guatemalan families.