Guatemala: Economic activity growth remains robust by pre-pandemic standards in February
Latest reading: Annual economic activity growth edged down to 3.4% in February from January’s 3.5%, but remained broadly in line with the pre-pandemic 10-year average of 3.5%. Looking at the details of the release, sturdy rises in the financial, manufacturing, domestic trade, real estate and construction sectors likely supported the economy.
As a result, the trend was largely stable, with annual average growth in economic activity ticking up to 3.7% in February (January: +3.6% yoy).
On the external front, merchandise exports rose at a faster pace of 9.6% in February compared to January’s 4.4% print. Moreover, in February, remittances inflows remained elevated, clocking a 19.2% increase (January: +23.8% yoy) as fear of deportation among Guatemalans living in the U.S. mounted; the short-lived 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.”