Economic Growth: Optimism at the End of 2020

Variations indicating a certain improvement in the world economy, the reopening of different markets and the recovery of exports are some of the factors that could influence Guatemala's economic activity to decrease less than expected in 2020.

Wednesday, August 26, 2020

In this context of economic crisis resulting from the outbreak of covid-19, the Economic Commission for Latin America and the Caribbean (ECLAC) predicted in April that the Guatemalan economy would fall by 1.3% at the end of 2020. According to the projections updated in July, the contraction of the Gross Domestic Product would be worse, as the forecast was for a -4.1% variation.

In recent weeks the situation has changed and although it is expected that at the end of the year production will close in negative territory, when compared to 2019 levels, the fall could be considerably less.

Check out the "System for monitoring markets and the economic situation in Central American countries", developed by CentralAmericaData.

Sergio Recinos, president of the Bank of Guatemala told Prensalibre.com that "...based on what they have observed in the world economy, plus the indicators that have been noted so far, production points to be in the best range. Unfortunately, it is always falling, but already at -1.5%."

Economic activity has shown signs of improvement. At the beginning of August, the Bank of Guatemala reported that after the IMAE in the local economy registered a -12% annual variation in May of this year and in the context of the economic crisis, during June 2020 the contraction of production was less, reporting a 9% fall with respect to the same month in 2019.

Erick Coyoy, former Minister of Economy, said that "... fortunately the income from family remittances improves and exports are not so bad, but it is not that it responds to a local strategy that has control, but that the U.S. economy, are not so bad, despite the unemployment rate."

For the ex-official, if the situation of the U.S. economy continues to improve, 2020 will not be so negative for Guatemalan economic activity.

See "2020-2021 Economic Outlook" from the Bank of Guatemala



More on this topic

Uncertainty about Slow Progress in the Vaccination Process

June 2021

Although expectations for the end of 2021 are good for the Guatemalan economy, there is uncertainty regarding what will happen in the second part of the year, as the vaccination process is progressing slowly.

According to World Bank forecasts published in June 2021, it is expected that at the end of the year, Guatemala's Gross Domestic Product will grow 3.6% year-on-year.

Economic Recovery: Which Sectors Are Winning?

October 2020

Agriculture, Financial and Insurance Activities, and Real Estate Activities, are the sectors that in Guatemala and in the context of the economic reopening, have increased their growth forecasts for 2020.

In June, when mobility restrictions were severe in the country due to the outbreak of covid-19, the Bank of Guatemala (Banguat) predicted that by the end of the year, Agriculture would grow by 1.1%, Financial and insurance activities by 2% and Real estate activities by 2.8%.

Economic Activity: Slight Improvement in Costa Rica

October 2020

In the context of the crisis generated by the outbreak of covid-19 and after reporting a -9% year-on-year variation in July, in August the IMAE registered a smaller reduction by contracting 8% compared to the same month in 2019.

The fall in the volume of production is greater in the activities of hotels and restaurants (59.3%), transport and storage (27.4%) and trade (15.5%), all of which is closely related to the greater incidence in these sectors of national and international restrictions on the movement of people and goods, reported the Central Bank of Costa Rica (BCCR).

Costa Rican Economy: Forecasts Worsen

July 2020

In April the Central Bank of Costa Rica predicted that by the end of 2020 GDP would fall by 3.6%, but due to the current health and economic crisis scenario the projections worsened, and now a 5% contraction in production is estimated.

The effect of the current international situation would be transmitted to the national economy through various channels: growth in trading partners, lower prices of raw materials and financial conditions, according to an official report.

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