Economic Recovery: Which Sectors Are Winning?

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.

Wednesday, October 14, 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%.

At the end of July, the government began to relax restrictions and economic activity began to recover.

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

In this scenario of reopening the economy, the projections calculated in October have improved. According to Banguat, it is expected that Agriculture will grow 3%, Financial and Insurance Activities 5.3% and Real Estate Activities 3.3%.

It is expected that other economic sectors will have negative variations, however, they could improve at the end of the year.

Johny Gramajo, economic manager of Banguat, said to that in the case of the manufacturing industry, between June and October "... it was revised from a decrease of -3.7% to -0.5%, and it is explained by a better expectation in the external demand of oils and vegetable and animal fats, increase in the elaboration and conservation of meats, food products such as rice, noodles, which is associated to a domestic demand of these products."

The article adds that "... the activity of commerce and repair of vehicles that had a contraction of -3% and -2.4%, which is associated with the improvement of the activity of industry and agriculture that increases the commercialization of goods and services."

According to official figures, in May the Index of Economic Activity (IMAE) peaked at -11%, but during June, July and August, production contracted less, reporting falls of 8%, 5% and 2%, in that order.

More on this topic

Which Economies Have Recovered the Most?

October 2020

As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.

Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19.

Economic Growth: Optimism at the End of 2020

August 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.

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.

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.

Economic Reactivation: Reverse in Costa Rica

June 2020

Arguing that the country is at risk of taking the route of an exponential covid-19 infection curve, the government suspended phase 3 of the commercial reopening and decreed new vehicle restrictions for June 20-21.

Due to the increase in cases announced on June 19 at a press conference, the government decided to tighten health measures issued by the Ministry of Health to contain the spread of the disease, thus postponing the third phase of reopening announced on June 18.

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