Guatemala: Economy decelerates in third quarter
February 1, 2011
In the third quarter, GDP expanded 1.8% over the same period the previous year, which was almost half the 3.5% increase observed in the second quarter. The result marked the slowest expansion since the third quarter of 2009. The slowdown in the third quarter was broad-based, as growth tumbled in both the external and domestic sectors. Private consumption expanded 2.2% year-on-year, more than halving the 5.2% increase tallied in the second quarter. Government consumption decelerated sharply from an 11.3% expansion in the second quarter to a 3.3% increase in the third quarter. Only fixed investment rebounded in the third quarter, growing 2.5% year-on-year, contrasting the 1.8% contraction observed in the second quarter. Activity in the external sector was subdued. Exports decelerated from the 8.5% expansion observed in the second quarter to rise a paltry 4.0% in the third quarter. Imports, which added 17.8% in the second quarter, experienced an even sharper deceleration, growing just 4.8% in the second quarter. At the sector level, the deceleration over the second quarter mainly reflected a contraction in agriculture (Q2: +2.0% year-on-year; Q3: -0.8% yoy). In addition, mining and quarrying swung from a 3.3% expansion in the second quarter to a 10.8% contraction in the third. However, conditions in the construction sector improved, as a 15.9% decline observed in the April-June period was followed by a more moderate 6.3% contraction in the July-September period. More recent data point to improving performance towards the end of 2010. According to the monthly indicator for economic activity (IMAE, indice Mensual de la Actividad Economica), economic activity rose 4.0% in November over the same month the previous year. The increase was well above the 1.7% increase observed in October and represented the fastest growth pace since July 2010. The Central Bank expects the economy to expand between 2.6% and 3.2% this year.
Author: Ricardo Aceves, Senior Economist