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.
In the I Quarter of 2021, 58% of businessmen reported stability in employment, while 36% reported better economic conditions compared to the same period in 2020.
The I Business Perception Survey 2021, conducted by the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (CACIF), indicates that 36% of the executives consulted, confirmed a recovery in their sales in the first quarter of the year, with a growth of up to 20% compared to the first quarter of 2020.
In March 2021, the Monthly Index of Economic Activity reported a 6.9% increase over the level recorded in the same month of 2020.
The Guatemalan economy continues to show positive signs, as after facing a crisis during 2020 due to the covid-19 outbreak, economic activity has recovered rapidly in the last months of last year and in the first quarter of 2021.
According to the IMF, the local economy is well positioned to support the recovery and overcome the deterioration of social indicators, which worsened due to the pandemic caused by the Covid-19 outbreak.
Strong remittances, pandemic-resilient productive specialization, and unprecedented economic policy support limited economic contraction in 2020, while the outlook for 2021 benefits from additional U.S.
The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.
After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.
During 2020 in all countries of the region, construction activity decreased considerably and Central American cement imports stagnated, this adverse scenario is explained by the economic crisis generated by the pandemic.
The construction industry statistics system, which is part of the interactive platform "Construction in Central America" of CentralAmericaData's Business Intelligence area, compiles the most important industry data for each of the countries in the region.
Twelve months after Central America began a health and economic crisis triggered by the covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.
In March 2020, the first cases of covid-19 began to be detected in the countries of the region. The highly contagious disease, which at that time had already claimed the lives of thousands of people around the world, forced Central American governments to establish mobility restrictions.
During January of this year, the Monthly Index of Economic Activity reported a 3.2% increase compared to the level reported in the same month of 2020.
The Guatemalan economy continues to show positive signs, since after facing a crisis during 2020 due to the covid-19 outbreak, economic activity has recovered quickly in recent months.
The World Bank has improved economic growth projections for all Central American economies for 2021, with Honduras, El Salvador and Panama having the most promising forecasts.
In June 2020, when the health and economic effects of the pandemic that caused the covid-19 outbreak were beginning to be reported, the World Bank predicted that in 2021 Nicaragua's Gross Domestic Product would decrease by -1.6%, but in a January 2021 publication it projected that the drop would be -0.9%.
Because of the fall in economic activity and the restrictions imposed to contain the spread of covid-19, businessmen in Costa Rica and Panama predict that the process of economic recovery will not be completed in the near future.
In this crisis scenario generated by the covid-19 outbreak, the Costa Rican economy does not show clear signs of recovery, since during November 2020 the Monthly Index of Economic Activity reported a year-on-year fall of 6.2%, a decline similar to that reported in October, when it was 6.3%.
After reporting a 2% drop in October from the previous month, in November the Economic Activity Confidence Index continued to decline, registering a 6% decrease.
The Panel forecasts an inflationary rhythm of 4.91% for November, 4.75% for December 2020 and 4.60% for January 2021, according to the Bank of Guatemala's report.
After bottoming out in the second quarter of the year, Guatemala's industrial activity index reversed its trend as of July, and in September 2020 registered a 6% drop.
According to analysis by Central American Business Intelligence (Cabi), because the mobility of people in the country is not fully restored, some sub-sectors are still affected.
In the current scenario, it is predicted that the Industrial Activity Index will close 2020 with a year-on-year variation of between 0% and 1%, and it is expected that by 2021 the sector's production will increase by between 9% and 11%.
After seven months of reporting drops in production levels, which were caused by the crisis generated by the covid-19 outbreak, during October the Monthly Index of Economic Activity registered a 1.3% year-on-year variation.
The health emergency led to a severe economic crisis, which began to become evident in March, when the Monthly Index of Economic Activity (IMAE) fell 5% year-on-year.
After dropping in May 2020 due to the outbreak of covid-19, then registering a -11% year-on-year variation, since then the economic activity index has been recovering quickly, reporting a reduction of only 0.3% in September.
The 0.3% decline in the Monthly Index of Economic Activity (IMAE) was influenced by the drop recorded in Accommodation and food service activities, Construction, Trade and vehicle repair, Transportation and storage, as well as by the growth observed in Manufacturing industries; Supply of electricity, water and sanitation services, and, Agriculture, livestock, forestry and fishing.
In the critical context of this year, the resilience of remittances and exports, added to the decline in oil prices, would have somewhat shielded the Guatemalan economy, whose GDP would fall only 2% by the end of 2020.
The programs in response to Covid-19 (Bono Familia, Fondo de Protección al Empleo, Fondo de Crédito para Capital de Trabajo), along with the temporary restructuring of loans by the banking system, are helping to sustain household income and business liquidity, the multilateral agency reported after making its last visit.