For the international organization, during 2020, Guatemala's economy showed resilience, since in the context of the crisis caused by the Covid-19 outbreak, the GDP contracted only 1.5%.
According to the International Monetary Fund, in a context of favorable specialization of production and exports, resilience of remittances, and unprecedented support from monetary and fiscal policies, the drop in Guatemalan production was minimal compared to that reported in other Central American countries.
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.
Reducing costs and barriers to foreign trade in Central American economies is key for the region to overcome the economic recession caused by the outbreak of Covid-19.
A report prepared by the World Bank explains that boosting economic activity and employing a higher percentage of the labor force are objectives that can be achieved through reforms that strengthen the private sector and attract investment.
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.
Strengthening trade between the US and the region, fighting corruption in the Northern Triangle and reducing illegal migration flows, are some of the axes on which Joe Biden, the US president who has been sworn in, is expected to focus.
Biden, representative of the Democratic Party and winner of the last US elections, whose results were close, arrives at the White House to replace Donald Trump.
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 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.
The next U.S. president is not yet known, but in the region it is expected that in an eventual new Trump administration, the focus will be on the recovery of the U.S. economy, while an eventual Biden administration would focus on countering corruption and illegal migration.
Two days after Election Day took place, the United States is experiencing an atmosphere of tension and uncertainty, since because the results are closed, neither candidate can yet be declared the winner.
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.
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. The strict quarantines decreed, the closure of borders and commercial establishments, ended up damaging the dynamism of productive activities.
After the IMAE in Guatemala registered a -11% year-on-year variation in May of this year, during June and July the production contractions were lower, reporting falls of 7% and 5%, in that order.
The Bank of Guatemala reported that in the current economic crisis that emerged due to the spread of covid-19, the activities that have most boosted the drop in production are trade, tourism and transportation.
Speeding up the repayment of the tax credit, repealing the Solidarity Tax, approving the Leasing Law, reforming the Banking Law and the Free Zone Law, is part of what Guatemalan businessmen are proposing to reactivate the economy in this context of crisis.
At present, Guatemala is immersed in a severe economic crisis, which was generated by the restrictions to productive activities that were decreed due to the outbreak of covid-19.
Due to the spread of the covid-19, family remittances sent to the country fell in March, April and May; however, the trend was reversed in June, when a 9% year-on-year variation was registered.
The most recent data from the Bank of Guatemala show that in the first six months of 2020 the country received remittances for $4.88 billion, an amount that is 1% lower than the $4.92 billion registered in the same period in 2019.