The Bank of Guatemala projects a slight downward trend in interest rates in the banking system in 2017 and growth of between 7% and 10% in credit to the private sector.
From the report "Performance in 2016 and Prospects for 2017" by the Bank of Guatemala:
Growth in economic activity, as measured by gross domestic product in real terms, is estimated to have grown 3.1% in 2016; while in 2017 it will grow in a range of between 3.0% and 3.8%, close to the average growth in 2011-2016 with positive growth in almost all economic activities, both in 2016 and in 2017.
The Bank of Guatemala has left the monetary policy rate unchanged, citing uncertainty and weakness in the international context, and expects growth of 4.9% in GDP in 2017.
In the domestic environment the Bank of Guatemala (Banguat) stressed that economic activity continues to record behavior consistent with the target range for 2016 (between 3.1% and 3.7%), which is reflected in the evolution of severaleconomic activity indicators (Monthly Index of economic activity, bank credit to the private sector in domestic currency, volume of imports and remittances, among other things).
The Bank of Guatemala is keeping the leading rate at 3% arguing that the economy is keeping up a steady rate of growth of between 3% and 4%, in line with expectations for this year.
From the statement "Summary of the arguments to determine the level of monetary policy rate session 19-2016:
In the internal environment, the Acting Chairman highlighted the evolution of economic activity, measured by the IMAE trend-cycle, which in February recorded a variation of 3.4%, consistent with the annual estimate of economic growth of between 3.1% and 3.9% for this year. In the external sector, in February, it was noted that exports went down by 3.3%, a result of a decrease in volume (4.5%), which offset the slight increase in the average export price; while imports fell 4.2% as a result of the fall in the average price (14.0%), especially of fuels and lubricants, while the volume of imports recorded an increase (11.6%). In addition, it was noted that foreign exchange earnings from remittances continue to reflect a significant dynamism, supporting private consumption. Regarding the nominal exchange rate, it was emphasized that this is evolving according to its fundamentals, remaining stable so far this year.
Guatemala´s handling of a serious political crisis through legal means and confidence in the incoming government has allowed it to close 2015 with stable growth of 4.1%.
The Bank of Guatemala reports that "... Economic activity continues to perform in a manner consistent with the range of annual economic growth forecast for 2015, which is reflected, among other indicators, in the evolution of the IMAE, remittances and bank loans to the private sector. Although inflation continues to be influenced by the fall in international prices of oil and its derivatives, to the extent that this effect fades, inflation will start to converge to the central value of the target. "
Increased borrowing costs, a disincentive to foreign investment and distrust of economic performance, are part of the expected scenario if public debt growth is not controlled.
Prensalibre.com reports that "... The draft budget for 2015 presented by the Ministry of Finance, amounting to $9.250 million (Q71 thousand 840.8 million), contemplates taking on new debt of about $2 billion (Q15 billion), of which $1.6 billion (Q12 thousand 334 million) came from bonds and loans. "
The Monetary Board, at its meeting on June 25, decided to lower the monetary policy leader rate from 4.75% to 4.50%
Among the arguments given by the authorities of the Central Bank of Guatemala were "... the behavior of the price of raw materials such as corn and wheat products which are holding a downward trend ... and the rising oil price."
On the domestic side the monetary authority said that "...
Analysis of the international economic scenario, Guatemala's internal situation, and decisions on Leading Monetary Policy Interest Rate.
In determining the rate leader the following was taken into consideration:
In the external environment:
The global economy continues to recover, particularly in advanced economies, although there are still downside risks, especially in emerging market economies.
During 2013 the Guatemalan economy continued to recover and show dynamism in most sectors in the country.
The Monetary Authority of Guatemala notes that in 2013 the country had a satisfactory rate of economic activity consistent with the recovery that has been seen in the world economy.
The entity predicts a robust 2014 with a strengthening of economic activity domestically, mainly driven by an acceleration in world trade, in which Guatemala is immersed.
The Bank of Guatemala has increased the monetary policy leading interest rate from 4.75% to 5.00% taking effect from 28 July.
In its analysis, the Monetary Board took into consideration that the global economy is continuing to expand, albeit at a slower pace than expected. However, according to the International Monetary Fund, this moderation in growth is temporary and forecasts still point to global growth being located above the historical average. It also found that international prices of raw materials (oil, corn and wheat) in recent weeks again showed an increasing trend and are staying at levels high compared to the previous year
The current Superintendent of Banks of Guatemala, Edgar Barquin, will take over the presidency of the Central Bank of Guatemala on Friday.
Barquin is a CPA, auditor, attorney, notary and was one of the creators of Guatemala president Alavaro Colom´s economic plan. He will replace Maria Antonieta Del Cid de Bonilla.
According to prensalibre.com, Banguat currently is responsible for keeping inflation under control as well as implementing monetary, currency exchange and credit policies."
The International Monetary Fund (IMF) report sheds a positive light on the country's macroeconomic situation and the stability of its financial system.
A staff team from the International Monetary Fund (IMF) visited Guatemala during August 17-26, 2010 to conduct the fourth and final review of the Stand-By Arrangement approved in April 2009. The mission met with Minister of Finance Edgar Balsells; Central Bank Governor María Antonieta de Bonilla; Superintendent of Banks Edgar Barquín; other senior government officials, and representatives of the private sector.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.