Guatemala: Economy hits the breaks in Q1
July 8, 2016
In Q1 2016, the economy expanded 2.8% over the same period of the previous year. The expansion marked a notable deceleration compared to the 4.1% increase tallied in Q4 and the smallest expansion since Q3 2012. The slowdown was broad-based as most sectors of the economy observed a deceleration, the most notable being in the public sector.
Private consumption growth moderated from a 5.6% expansion in Q4 to a 4.8% increase in Q1. This comes despite strong remittances growth towards the end last year and in Q1 this year. Government consumption observed a starker contraction in Q1, falling 8.1% (Q4: -2.3% year-on-year) and marked the lowest figure in more than 11 years. Investment was the sole bright spot in the economy, as it was the only sector that witnessed an acceleration. Total investment rose 10.2% in Q1, up from a 7.9% expansion in Q4. Fixed investment helped drive this expansion as it also accelerated (Q1: +7.7% yoy, Q4: +2.2% yoy). As a result, domestic demand fell from 5.1% in Q4 to 4.4% in Q1.
On the external side of the economy, the contraction in exports accelerated from 0.1% in Q4 to 1.8% in Q1, which marked the largest contraction since Q3 2009 and came amid inclement weather which likely disrupted agricultural exports. Import growth slowed from 6.5% in Q4 to 4.9% in Q1. As a result, the external sector’s contribution to growth deteriorated form minus 2.3% in Q4 to minus 2.5% in Q1.
Author: Robert Hill, Economist