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.
In accordance with the behavior that has been reported in recent years, in 2018 the country received $5,469 million in family remittances, 8% more than that recorded in 2017.
The report of the Central Reserve Bank (BCR) explains that last year the five main departments receiving family remittances were: San Salvador (19.6% of the total country), San Miguel (11.7%), La Unión (8.2%), Santa Ana (7.9%) and La Libertad (7.7%).
During November 2018, the Monthly Index of Economic Activity in the country reported a 2% year-on-year increase, which is less than the 3% increase recorded in October last year.
Compared with November 2017, most economic activities moderated their growth, which was reflected in the slowdown of the overall indicator. This result was determined by the deterioration in consumer confidence, a persistence of protest movements of some trade unions in opposition to the fiscal reform and problems in trade flows with Central America given the socio-political situation of Nicaragua, reported the Central Bank of Costa Rica.
Because of the performance of the Financial Intermediation and Manufacturing sectors, economic activity reported a 3.7% year-on-year increase in November 2018.
The upward trend in Financial Intermediation, Insurance and Pension Funds is explained by the increase in interest income derived from loan balances granted by banks, together with the performance of pension institutes due to higher contributions received and returns on their investments, reported the Central Bank of Honduras (BCH).
During November 2018, economic activity in Guatemala reported a 3.3% increase over the same month in 2017, mainly because of the performance of wholesale and retail trade.
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.
After in the first semester of 2018 a 13% y-o-y fall in foreign investment flows was reported, the accumulated up to September totaled $4.251 million, 9% more than in the same period of 2017.
According to figures from the General Comptroller of the Republic, Foreign Direct Investment in Panama increased between the first nine months of 2017 and the same period in 2018, going from $3.892 million to $4.251 million.
Because of the political crisis that began in Nicaragua in April, during the third quarter of last year the country's GDP fell by 4.5% compared to the same period in 2017.
The Central Bank of Nicaragua reported that in the third quarter of 2018, the economy registered a 4.8 percent year-on-year decline and a 0.5 percent annual average reduction.
"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.
During the first nine months of 2018, Foreign Direct Investment flows to the country totaled $457 million, almost 5% more than in the same period in 2017.
From the Central Reserve Bank statement:
At the end of the third quarter of 2018, increases in foreign direct investment (FDI) totaled US$1,221.8 million, reflecting a 24.1% increase (US$237.2 million) over the previous year. In these transactions, the industrial, information and communications and financial sectors were highlighted, representing more than 70% of the total. The increase in FDI is the largest recorded in the first three quarters since 2010.
Arguing that the medium-term forecasts indicate that the inflation trajectory will remain above the tolerance range, the BCH decided to raise the Monetary Policy Rate by 0.25%.
From the BCH press release:
January 4th, 2019. In ordinary session No.158-10-12/2018, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH), analyzed the recent evolution and perspectives for the main macroeconomic and financial indicators, at domestic and international levels.
During the new year, the main challenge for Costa Rica's economy will be to increase above 3%, given that 2018 was marked by a context of fiscal uncertainty and economic slowdown.
According to the Central Bank of Costa Rica, economic growth, measured by the year-on-year variation of the trend cycle of gross domestic product (GDP), slowed last year, and recorded to the third quarter a 2.1% rate (3.2% in the same period of 2017 and 2.8% as the average rate of the two previous quarters).
In December 2018, the Confidence in Economic Activity Index in Guatemala reported a 14% increase regarding November, and in relation to the same month in 2017 it increased 8%.
The Banco de Guatemala informed that in the last Economic Expectations Survey an inflationary rhythm of 4.01% is forecast for December 2018. It foresees 3.93% for January 3.96% for February and 4.24% for December. In addition, for a 24-month period (December 2020) the Panel forecasts a 4.38% inflationary rhythm.
The economic environment in 2018 was defined by a context of fiscal uncertainty, economic slowdown and greater financial volatility, together with a difficult external environment.
Regarding the fiscal uncertainty occupying a large part of last year's economic agenda, explains the Central Bank of Costa Rica (BCCR) which was originated, firstly, in the electoral process that lasted until April, and later in the difficulties faced to achieve an agreement that would help restore the sustainability of public finances in the medium term.
During the last year, the Caribbean economy increased 7.1%, a behavior that was caused by the dynamism of the Communications, Construction and Free Trade Zones sectors.
According to preliminary figures of the Monthly Indicator of Economic Activity (IMAE), the Dominican economy would close 2018 with a 7.0% average growth, because of an accumulated variation of 6.9% in January-September and a preliminary estimate of 7.1% in the last quarter of the year, informed the Central Bank of the Dominican Republic.
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