Guatemala: GDP maintains momentum in first quarter
July 15, 2011
In the first quarter, GDP expanded 3.1% over the same period last year, according to data released by the Central Bank. The reading virtually matched the 3.2% increase registered in fourth quarter. Moreover, the Central Bank revised its annual GDP growth rate for 2010 to 2.8%, up from its previous 2.6%. The first quarter print reflected a slowdown in domestic demand compared to the previous quarter, while the net contribution from the external sector to overall economic growth improved. Total consumption expanded 3.3% year-on-year in the first quarter, slower than the 4.3% increase observed in the fourth quarter. In the same vein, gross fixed investment decelerated sharply from a 4.6% expansion in the fourth quarter to a 1.6% increase in the first. Activity in the external sector improved, as exports rebounded over the previous quarter. Exports of goods and services accelerated from a 0.7% expansion in the fourth quarter to a stronger 4.9% increase in the first. Imports, which jumped 11.6% in the final three-month period of 2010, experienced a sharp deceleration, growing only 5.7% in the first quarter. As a result, the net contribution from the external sector to overall economic growth improved from minus 3.7 percentage points in Q4 to minus 0.7 percentage points in Q1. At the sector level, the first quarter expansion reflected improvements in agriculture and industry, whilst the services sector deteriorated compared to the previous quarter. More recent data, however suggest that economic activity in the second quarter slowed. According to the monthly indicator for economic activity (IMAE, indice Mensual de la Actividad Economica), economic activity rose 2.7% in May over the same month the previous year, which was well below the 3.9% increase observed in April and represented the slowest pace since December of 2010. The Central Bank expects the economy to expand between 2.6% and 3.2% this year.
Author: Ricardo Aceves, Senior Economist