The growth of family remittances, the recovery of credit to the private sector and the upturn in investment in capital goods would determine a better economic performance this year.
In a forum organized by the Chamber of Industry of Guatemala, representatives of the Bank of Guatemala (Banguat) and Central American Business Intelligence (CABI), agreed that this year the country's economy could register a better performance than in 2018.
From January to November last year, the country exported $165 million in electricity to Mexico and Central America, 73% more than in the same period in 2017.
The Report of the Monetary, Exchange and Credit Policy of the Banco de Guatemala, details that the energy exportations are mainly caused by the investments made in the electricity transmission network of the country, which has allowed satisfying the increase of the demand coming from El Salvador and Honduras.
After 14 appeals filed, the Guatemalan Constitutional Court declared unconstitutional the law that attempted to regulate the credit card market in the country.
The Credit Card Law became effective on March 8th, 2016, however, after the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC), it was provisionally suspended on March 31st of the same year.
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.
Between November of this year and the same month of 2017, the portfolio of loans granted by Guatemalan banks to the private sector increased 6%, which is caused by the behavior of loans in dollars.
According to figures from the Bank of Guatemala, between November 2017 and the same month in 2018, total credit to the private sector increased from $24.338 million to $25.877 million.
During 2018, Guatemala received $1.175 million in FDI, barely 0.5% more than the investment reported in 2017, mainly because of the political and legal uncertainty that ruled the country.
Figures from the Banco de Guatemala (Banguat) report that in the last five years, the country has gained $6,139 million in foreign direct investment (FDI), being 2014 the one that registered the highest year-on-year increase when reporting a 7% rate regarding 2013.
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%.
Up to October, foreign sales totaled $8.978 million, almost 3% less than in the first ten months of 2017, and the main reason for the decline is the fall in international prices of some agricultural products.
The Banco de Guatemala reported that the most important products according to their participation in the total value of exports were: Clothing with US$1,209.4 million (13.5%), Banana with US$678.1 million (7.6%), Coffee with US$647.1 million (7.2%), Sugar with US$545.4 million (6.1%) and Fats and edible oils with $457.9 million (5.1%).These products represented 39.5% of total exports.
Between 2014 and 2017, the fiscal deficit increased to an average of 1.4% of GDP, and for this year the authorities plan to end at 1.6% and in 2019 it could increase to 2.5%.
Representatives of the Ministry of Public Finance informed that some of the increase in the fiscal deficit foreseen for next year will be caused by the fact that the General Budget of Income and Expenditure of the State for Fiscal Year 2019, which will ascend to $11,390 million, will allow assigning more resources for infrastructure maintenance.
Although in the first nine months of the year foreign sales fell almost 3% compared to the same period in 2017, the Banco de Guatemala forecasts that the trend will be reversed by the end of 2018.
The fall in the international prices of sugar, coffee and natural rubber, largely explain the decline in income from sales abroad. According to figures from the Banco de Guatemala (Banguat), up to September, foreign sales totaled $8.147 million, 2.6% less than the figure recorded in the first nine months of last year.
Because licensing is proceeding faster, private projects are rebounding in Guatemala and the sector in general expects to close 2018 with a 3% increase.
Representatives of the Guatemalan Chamber of Construction (CGC), explained that the positive behavior of the sector this year is because of the liberalization of licenses for the construction of projects that were pending to be authorized and new investments made.
Because of the increase in energy demand, last year in Guatemala the Electricity Supply and Water Collection sector was the sector that explained the largest increase in the GDP calculation.
Notwithstanding the conflict that has affected the development of several hydroelectric projects, the electricity supply and water collection sector has reported year-on-year increases of more than 4.5% for the 2010-2018 period.
During the first eight months of the year, the Central American country generated $600 million in sales to Eurozone countries, 4% more than reported in the same period of 2017.
According to figures from the Bank of Guatemala, the Netherlands is the destination of Guatemalan exports that showed the greatest dynamism between January and August, with sales of $235 million, an increase of 14% over what was reported in 2017.
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.
Guatemala exported $10 million worth of electricity to the neighboring country in the first seven months, significantly more than the one million dollars reported in 2017.
Sergio Recinos, Banco de Guatemala president, said to Dca.gob.gt that "... With regard to this activity, greater dynamism is expected in electricity generation associated with the expected increase in external demand from Mexico and the restructuring of the energy matrix'.”
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