Although poor social indicators and a low tax burden are a threat to the country's progress, for Fitch the Guatemalan economy has the capacity to overcome external adversities.
After the last visit of Fitch Ratings to Guatemala, representatives of the rating agency expressed the opinion that health, education and security indicators, together with the tax situation, are issues that should concern the country.
On March 18, the political campaign for the General Elections in Guatemala officially began, but the legal inconveniences faced by some candidates cause doubts for the future.
Zury Ríos, Thelma Aldana and Sandra Torres are the three presidential candidates leading the voting intentions for the 2019 General Elections, but both Ríos and Aldana have had legal problems in their registration process, and Torres, already a registered candidate, was accused of illegal electoral financing. These cases have caught the public's attention and prevented them from knowing the concrete economic proposals.
Last year, the flow of family remittances registered by the country reached the highest annual amount, with $9.288 million, 13% more than in 2017.
The most recent figures from the Bank of Guatemala show that in December 2018 the country received $843 million in remittances, 17% more than the $720 million recorded in the same month in 2017.
Between 2011 and 2018, remittance income has nearly doubled, rising from $4.378 million to $9.288 million in 2018.
"The tightening of global financing conditions is a concern for Central American countries with large current account deficits or those highly dependent on capital flows."
According to the report "World Economic Outlook - January 2019" compiled by the World Bank (WB), countries with a high external debt burden would be at risk if a sudden change in investor confidence in emerging market and developing economies were to occur.
Excluding Nicaragua, the economies of Central American countries are projected to increase 2%, however, for the business sector some of the expectations may be too optimistic.
The 5.6% growth estimate for Panama is too optimistic for the private sector, as no major changes are expected compared to 2018.
The president of the National Council of Private Enterprise, Severo Sousa, explained to Panamaamerica.com.pa that "...
The Bank of Guatemala expects next year's economic growth to be better than in 2018, which would be caused by higher public spending and the growth of family remittances.
Authorities of the Bank of Guatemala (Banguat) informed that the Guatemalan economy will close 2018 with a nearly 3% growth, however, for next year is expected that the increase in GDP will be in the range between 3% and 3.8%.
After the political and social crisis that began in April, the Nicaraguan economy will lose more than $1.3 billion this year, and GDP could decline by 4%, together with the collateral effects suffered by the countries of the region.
Several indicators have reflected the weak performance of the country's economy since the crisis began. One of them is the IMAE, as the Central Bank of Nicaragua reported that following the trend that has been observed since May, in September the index reported a 4.3% decrease compared to the same month in 2017.
Although some uncertainty is projected next year in Guatemala, because of the presidential and legislative elections scheduled for June, it is estimated that the economy will increase 3.2%.
According to the Center for National Economic Research (Cien), it is expected that in 2019 there will be some uncertainty derived from the changes in the three branches of government.
During October, economic activity in Guatemala reported a 3.3% increase over the same month in 2017, mainly because of the performance of private services and wholesale and retail trade.
The Banco de Guatemala (Banguat) reported that the economic activity according to the IMAE estimation, in October 2018, showed a 3.3% growth rate (3.7% in October 2017).
In the first ten months of the year, income from family remittances totaled $7.687 million, 13% higher than reported in the same period in 2017.
The latest data from the Bank of Guatemala show that in October 2018 the country received $864 million in remittances, 19% more than the $728 million registered in the same month in 2017.
Between the first ten months of 2011 and the same period in 2018, remittance income has almost doubled, up from $3.656 million in 2011 to $7.687 million in 2018.
The region is expected to conclude 2018 with a rise of just over 4% in the volume exported and just 3.6% in value, due to the fall in international prices of several agricultural products.
According to the International Trade Outlook for Latin America and the Caribbean 2018, published by the Economic Commission for Latin America and the Caribbean (ECLAC), it is expected that this year Central America will export larger volumes at lower prices.
The new methodology that the Banco de Guatemala will use to measure the country's production incorporates six new sectors, which are included in the eleven already existing ones.
The Representatives of the Bank of Guatemala (Banguat) informed that in case of private services it will be divided into professional, scientific and technical activities, administrative services and support activities.
During the first nine months of the year, income from family remittances reached $6,824 million, 12% higher than the amount reported for the same period in 2017.
The most recent figures from the Bank of Guatemala show that in September 2018 the country received remittances of $746 million, which is 11% higher than the $672 million reported for the same month in 2017.
Arguing that the behavior of the main indicators of the local economy are consistent with those expected, Banco de Guatemala has decided to maintain the monetary policy rate at 2.75%.
From a statement issued by the Bank of Guatemala:
Guatemala, September 27, 2018.The Monetary Board, in its session held on September 26, based on a comprehensive analysis of the external and internal economic situation, after evaluating the Balance of Inflation Risks, decided to maintain the level of the leading monetary policy interest rate at 2.75%.
Since the beginning of the year Banco de Guatemala has intervened in the foreign exchange market buying foreign currency in order to curb appreciation of the local currency against the dollar, but in recent weeks it has been selling currencies in order to minimize depreciation.
In recent weeks the exchange rate of the Quetzal against the US dollar has been trending upwards, which has forced the Bank of Guatemala (Banguat) to sell foreign currency in the foreign exchange market.So far this year, up until September 24, it has had to intervene selling $402 million worth of foreign currency.