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Guatemala’s Economic Growth in Question

In the midst of a corruption scandal that has upended politics in Guatemala, El Periódico reports that some industry experts are predicting slower economic growth for the largest economy in Central America

Nils Leporowski, the president of the Chamber of Agriculture, predicts that the Guatemalan economy will grow by 2 to 2.5 percent in 2018. He pointed to several factors that influenced his prediction, including the fall in prices of Guatemala’s main exports, low investment and job creation, and a greater dependence on remittances.

“The medium-term scenario is not encouraging,” said Leporowski.

While a trade war between the United States and China, the European Union, and Canada and Mexico is brewing to the north, Paulo de León sees trade as a means to boost the Guatemalan economy.

León, the director of the Central American Business Intelligence, said that Guatemala is not taking full advantage of the free trade agreement between the United States, Central America, and the Dominican Republic.

In particular, Guatemala needs to diversify its exports and invest in higher value added goods.

In its monthly poll of economic expectations, the Banco de Guatemala reported that a panel of private analysts predicts the economy to expand by 3.0 percent in 2018 and 3.2 percent in 2019.

The panel estimated economic growth in the first quarter of 2018 to be 3.0 percent.

Growth rate of the real gross domestic product of the first quarter observed from 2006 to 2017 and expectations for the first quarter of 2018. / "Encuesta de Expectativas Económicas al Panel de Analistas Privados (EEE): junio de 2018" / Banco de Guatemala
Growth rate of the real gross domestic product of the first quarter observed from 2006 to 2017 and expectations for the first quarter of 2018. / “Encuesta de Expectativas Económicas al Panel de Analistas Privados (EEE): junio de 2018” / Banco de Guatemala

“According to the Panel, the main factors that could affect the pace of economic growth in 2018 are: the trajectory of fuel prices, the evolution of the international price of oil, stability in the nominal exchange rate, stability in the general level of prices, the performance of fiscal policy, the strengthening of the internal market and interest rate levels,” said the report.

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