Guatemala: Growth in remittances picks up pace in January
Remittances eased to USD 1,180.7 million in January, but annual growth picked up pace as remittance inflows expanded 30.2% year-on-year in the month (December: +30.0% yoy). Although remittances fell to an 11-month low in USD terms, this is in part due to seasonality. Furthermore, on a 12-month rolling basis, remittances increased 36.4% year-on-year in January, up from December’s 34.9% rise.
Remittances are a key source of income for Guatemalan families and tend to follow labor market trends in the United States, where the majority of remittance payments originate from. The economic recovery in the U.S. amid fiscal stimulus is therefore expected to buoy remittances and support the Guatemalan economy; private consumption is a key engine of growth for the economy.
Analysts at the EIU added:
“Growth is driven by the solid inflows of workers’ remittances from abroad. Reliance on the U.S. is the country’s biggest strength and biggest vulnerability.”