Latin America Advisor 2022-07-07 – Inter-American Dialogue

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

June 13, 2022

Will Guatemala Be Able To Sustain Its Economic Recovery?

Guatemala’s economy has been rebounding from the Covid-19 pandemic. Guatemala City is pictured. // File Photo: United Nations Development Programme.

Q

Guatemala’s economy has shown “remarkable resilience” amid “an unprecedented level of policy support, an early reopening of the economy and a favorable external environment, including from strong remittances,” the International Monetary Fund said June 7. The Central American country’s economy grew 8 percent last year and is expected to grow 4 percent this year, according to the IMF. What are the main factors driving Guatemala’s growth, and what headwinds could the economy face this year? What is the outlook for foreign direct investment in the country? What policies should Guatemala’s government pursue in order to modernize its economy and target vulnerable communities to achieve more inclusive economic gains?

A

Omar De la Torre, director and lead analyst for sovereign and international public finance at S&P Global Ratings: “Guatemala’s longstanding macroeconomic stability and fiscal prudence are helping to enhance GDP growth dynamics. The economic rebound in 2021 was backed by an early reopening of the economy, unprecedented monetary and fiscal support, and resilient remittances. Amid challenging global conditions, an economic downturn and weaker labor market in the United States could impair Guatemala’s performance as about one-third of its exports go to the United States, and most remittances, which accounted for about 18 percent of GDP in 2021, come from there. Net FDI posted an extraordinary increase in 2021 (3.85 percent of GDP), owed to the acquisition of a domestic telecoms firm, which is considered as a one-off event. We expect FDI to return to around 0.9 percent of GDP in the next few years…”

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Diego Arria
Director,
Columbus Group

Merike Blofield
Professor of Political Science,
University of Hamburg

Devry Boughner Vorwerk
CEO,
DevryBV Sustainable Strategies

Joyce Chang
Global Head of Research,
J.P. Morgan

Marlene Fernández
Corporate Vice President for Gov’t Relations,
Arcos Dorados (McDonald’s)

Peter Hakim
President Emeritus,
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Jon E. Huenemann
Council Member,
GLG Inc.

James R. Jones
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Monarch Global Strategies

Craig Kelly
Senior Director,
Int’l Gov’t Relations,
Exxon Mobil

Barbara Kotschwar
Professor of Political Economy,
Georgetown University

John Maisto
Director,
US Education Finance Group

Nicolas Mariscal
Chairman,
Grupo Marhnos

Thomas F. McLarty III
Chairman,
McLarty Associates

Beatrice Rangel
Director,
AMLA Consulting

Ernesto Revilla
Head of Latin American Economics, Citi

Gustavo Roosen
President,
IESA

Andrés Rozental
President, Rozental &
Asociados

Shelly Shetty
Managing Director,
Sovereigns, Fitch

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