Guatemala: Economy picks up in Q2
October 6, 2016
In Q2 2016, the economy expanded 3.4% over the same period of the previous year, following the deceleration in Q1, when GDP grew 2.9%. The acceleration was due to a less negative contribution from the external sector.
Private consumption growth moderated from a 4.7% expansion in Q1 to a 3.2% increase in Q2, despite strong remittance inflows. This marked its slowest pace of growth since Q4 2013. Government consumption contracted less in Q2, falling 6.2% (Q1: -7.8% year-on-year). The bulk of the improvement came from total investment, which rose 13.0%, up from a 10.5% expansion in Q1. The acceleration was primarily driven by stock increases, while fixed investment actually slowed dramatically (Q2: +1.1% yoy, Q1: +8.1% yoy). As a result, growth in domestic demand fell from 4.4% in Q1 to 3.5% in Q2.
On the external side of the economy, the contraction in exports slowed from 2.1% in Q1 to 1.9% in Q2. Import growth slowed from 5.0% in Q1 to 0.5% in Q2, the slowest pace recorded since Q3 2012. As a result, the external sector’s contribution to growth improved from minus 2.6 percentage points in Q1 to minus 0.8 percentage points in Q2.
Author: Christopher Mc Innes, Economist