Colorful city in Guatemala

Guatemala GDP Q4 2018

Guatemala: Economic growth edges down in the fourth quarter of 2018

The pace of economic growth in the Guatemalan economy was virtually unchanged in the final quarter of last year as the economy expanded 3.5% year-on-year, slightly down from the third quarter’s revised 3.6% increase (previously reported: +3.5% year-on-year). Consequently, the figure for 2018 as a whole year was also revised upwards from 3.0% to 3.1%, up from 2017’s 2.8% increase.

Economic growth in the fourth quarter was buttressed by resilient private consumption and a smaller drag on the economy from the external sector. Domestically, household expenditure increased 4.6% year-on-year, decelerating from the prior quarter’s 5.1% rise. This is likely linked to softer growth in remittances as inflationary pressures eased somewhat in the quarter and still-low borrowing costs. Meanwhile, public expenditure grew 1.7% in Q4, down from the prior quarter’s 6.0% expansion, and growth in fixed investment softened to 3.3% from 4.5% in the third quarter.

The external sector continued to drag on the economy, although less severely. Exports of goods and services fell 4.8% year-on-year in the fourth quarter, a steeper contraction than the third quarter’s 3.2% fall. Imports of goods and services, meanwhile, expanded 5.2%, which is down from the prior quarter’s 7.8% increase.

Looking ahead, the Guatemalan economy is projected to grow at a similar pace this year on stronger growth in public expenditure and fixed investment. Conversely, private consumption is seen losing some momentum as the U.S. economy moderates owing to the effect it will likely have on remittances, a significant proportion of which originate from the United States and an important source of income.

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