Guatemala Politics

Guatemala

Guatemala: Election results and recent political developments unlikely to impact economy

September 15, 2015

Guatemala is headed for a second-round runoff presidential election after a couple of tumultuous weeks in the country’s political arena. Jimmy Morales, an actor with no background in politics, came in first place in the 6 September election with 24% of the vote. Morales campaigned on a platform against corruption and rode a wave of anti-corruption sentiment to surge ahead of veteran politicians. The election took place just four days after increasingly-fervent protests, accusations over corruption and the indictment of several political aids and allies culminated in President Otto Pérez Molina’s resignation on 2 September. Molina left his post hours after a judge had issued a warrant for his arrest for implication in a customs fraud scandal and just a day after congress stripped him of his immunity from persecution.

Since no candidate garnered over 50% of the vote, Morales will go head-to-head in a runoff election on 25 October with former-First Lady Sandra Torres of the National Unity of Hope party (UNE), who marginally beat third-placed Manuel Baldizón of the Renewed Democratic Liberty party (LIDER). Morales, the candidate for conservative National Convergence Front (FNC), campaigned on a platform of conservative values and fighting corruption. Little is known about Morales’ economic policies or where his financial support throughout the election came from. Despite his lack of political experience, polls favor Morales to win the runoff against Torres.

The September election result signals a rejection of the traditional political elite and a change in Guatemala’s political landscape. In addition to the presidential race, citizens also voted for members of congress and local authorities; traditionally-dominant parties lost ground in both races. Congress will be more divided going forward, with no party gaining over 20% of the vote. Moreover, candidates from smaller political parties captured many major mayoralties.

Despite the political turmoil, there is little reason to suspect that the upheaval will impact Guatemala’s economy going forward. The economy relies heavily on significant remittance flows, which are unlikely to be affected by the election’s outcome. In addition, the country is in a favorable financial position, with a relatively low debt burden and a modest fiscal deficit.

FocusEconomics Consensus Forecast participants see GDP growing 3.9% in 2015, which is unchanged from last month’s forecast. For 2016, panelists expect the economy to expand 3.6%.


Author:, Economist

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