Guatemala: Economic activity growth ticks up in January
Latest reading: Annual economic activity growth rose to 3.4% in January from December’s 3.2%. Looking at the details of the release, sturdy rises in the financial, manufacturing, domestic trade, real estate plus energy and water supply sectors likely supported the economy.
Still, the trend pointed down, with annual average growth in economic activity edging down to 3.6% in January (December: +3.7% yoy).
On the external front, merchandise exports rose at a faster pace of 4.4% in January compared to December’s 3.8% print. Moreover, in January, remittances inflows surged 23.8% (December: +10.0% yoy) and reached a record high of USD 1.8 billion for the month as fear of deportation among Guatemalans living in the U.S. mounted. The surge in remittances bodes well for household budgets.
Panelist insight: EIU analysts commented on the outlook for remittances:
“We expect US immigration policies to remain restrictive in the coming years. Although the immediate increase in remittances will support Guatemalan household incomes in 2025, we expect that growth will slow as deportations rise and as Guatemalans in the US exhaust their ability to send larger portions of their earnings back home. Moreover, the slowing US economy will weigh on remittances.”