Guatemala: Remittance inflows grow at stronger pace in November
Remittances totaled USD 1,356.6 million in November, rising 37.9% year-on-year (October: +25.2% yoy). In the 12 months up to November, remittances totaled USD 14.9 billion (October: USD 14.6 billion), the highest print on record. The 12-month rolling sum marked a 34.4% increase from a year prior (October: 33.0% yoy).
Remittances are a key source of income for Guatemalan families and tend to follow employment trends in the United States, where the majority of remittance payments originate from. As such, the expected recovery in the U.S. amid vast government stimulus should boost remittances inflows and support the Guatemalan economy.
Firming economic activity next year, despite a softer growth rate, should see government revenues pick up. This bodes well for fiscal consolidation efforts, which will be further supported by the gradual rollback of Covid-19 support measures and weak budget execution; expenditure is expected to decrease by 1.2% compared to the rolled over 2021 budget. That said, greater public investment should see spending rise marginally next year. The budget was approved by the country’s Congress on 18 November.
Analysts at the EIU added:
“We expect public debt to decline slowly over the forecast period, driven by fiscal consolidation and steady growth rates; Guatemala’s public debt levels remain low by emerging-market standards. This will allow the government to retain adequate access to external financing from bond markets on reasonable terms if it needs to tap them in 2022-26.”