Guatemala International Reserves (months of imports)

Annual GDP growth should have eased slightly in the final quarter of 2022 from Q3. In October–December, accelerating inflation, softer growth in remittances and tumbling merchandise exports will have weighed on the reading. That said, the economic activity index grew at Q3’s average, supported by sustained expansions in the manufacturing, construction and services sectors. In Q1 2023, the economy should be improving. In January–February, remittance growth accelerated from Q4’s average, which, along with the government’s decision to extend the electricity subsidy, should support private spending. Less positively, in January, the annual economic activity index grew at a softer pace from the previous quarter’s expansion, signaling sluggish domestic output. In addition, the Central Bank’s February rate hike will likely stifle investment.