Guatemala: Economic growth moderates in the first quarter of 2019
July 22, 2019
Economic growth in Guatemala dropped to a one-year low in the first quarter amid a stronger drag from the external sector and softening domestic demand. The economy grew 3.0% over a year ago in the first quarter, down from the 3.5% year-on-year expansion logged in the final quarter of last year.
Private consumption growth eased from 4.6% in Q4 to 4.3% in Q1. This came on the back of a marked drop in remittances growth and a noticeable intensification of inflationary pressures, which bit into consumers’ pockets. Meanwhile, fixed investment and public consumption growth were stable from the prior quarter at 3.3% and 1.7%, respectively. Furthermore, as there was a significant buildup of inventory levels, domestic demand remained relatively stable; however, unstocking activity could hamper economic growth in subsequent quarters.
On the external front, exports of goods and services tanked 4.3%; this was, however, an improvement from the fourth quarter’s 4.8% contraction. Meanwhile, imports of goods and services increased 7.3% in the first quarter, marking a notable uptick from the fourth quarter’s 5.2% expansion.
The economy should keep a broadly steady pace of growth going forward, as a pick up in public consumption and fixed investment offsets easing private consumption. Household expenditure is expected to continue to lose steam amid ebbing U.S. economic momentum. Uncertainty over U.S. immigration policy—which could dent remittances growth—is a risk to the outlook, as the United States is a key source of remittances inflows for Guatemalan families.
Author: Jan Lammersen, Economist