Global Courant
In the event that global economic trends continue as they have been up to now and internal normalization continues, the new government authorities that take office in January 2024 will find a stable macroeconomic outlook.
The macroeconomic scenarios seem to be normalizing and no major structural changes are expected derived from the political-economic cycle, as indicated by the projections of the monetary authorities for indicators such as gross domestic product, inflation and the cost of the basic basket, the type of exchange, public debt management, tax collection, foreign trade and the income of family remittances.
Taken together, the foregoing provides an internal economic “electrocardiogram” and generates confidence in economic agents and decision makers. However, the behavior of many of these variables is highly conditioned by external factors, as was experienced a year ago with global inflation, the rise in the price of oil, the logistics crisis, the slowdown in the economies of the main trading partners. and situations such as international geopolitical conflict.
For now, the economic authorities designed a risk map for the economic outlook, both upward and downward, and in which different lines are considered.
Indicator performance
According to the presentations of the central bank, the growth projection of the Guatemalan economy measured by the gross domestic product (GDP), would be in a range of 2.5% to 4.5% with a core or central position of 3.5% both in 2023 as in 2024. The average during the period 2010 to 2022 was 3.5%, so the forecast remains at that potential.
José Alfredo Blanco, vice president of the Bank of Guatemala (Banguat) stressed, during the recent 2024 open budget workshops, that an economic growth rate of 3.5% and an inflationary closing of 5% are expected (in April the rate was 8.32% and in May it decreased to 6.54%). For December 2024 it is estimated at 4%, which would be within the range set by the Monetary Board (from 3% to 5%).
Among other indicators that he showed are family remittances, which would be increasing in a range of 6% to 9% with a core value of 7.5% for 2023 (with an amount of US$19,393 million) and for 2024 the projection is 4.5 % to 7.5%, for an average of 6% (some US$20,556 million). Remittances would be equivalent to 19% of GDP, according to the official forecast.
Regarding tax collection, this year a closing of Q92 thousand 735 million is projected, which will mean an increase of 5.5% compared to 2022 and a surplus of Q6 thousand 970.6 million, compared to the goal agreed with the Ministry of Finance ( Minfin) for this exercise, for Q85 thousand 765 million. By 2024, the collection of taxes would reach Q97 thousand 844 million, while the proposed ceiling of the state budget for next year was Q124 thousand 602 million, that is, Q8 thousand million more than the current one.
Foreign trade statistics (exports and imports) are beginning to show a slowdown, and this is largely due to the international prices of the main products that Guatemala ships and purchases.
The forecasts indicate that the increase in exports will be located in a range of 4.5% to 7.5% with a central position of 6%, which would mean some US$16,595 million; and by 2024, between 4% and 7% with a core value of 5.5%, for some US$17,508 million.
While for imports an increase of 6.5% to 9.5% is expected with a central value of 8% (US$34 thousand 693 million), while for the following year they are calculated at US$37 thousand 295 million and a range of 6% to 9%.
Other variables
Regarding the exchange rate, a few days ago, Álvaro González Ricci, president of the JM and Banguat, commented that the US currency has had a slight appreciation to Q7.83 (as an official reference) which is seen as normal and reiterated that The central bank does not intervene in the trend of the currency price, but moderates its volatility, which may have its origin in different reasons.
Although it is recognized that it is difficult to project the behavior of the variable, the trend for the second semester of the year is stability: In general terms, the official average rate is from Q7.78 to Q7.80, but the price is different in windows banking and can vary between 10 and 20 points up or down, depending on the amounts and the entity with which these transactions are made.
Regarding the public debt structure, the Minfin Public Credit Operations report indicates that as of last May 31, the debt balance was Q211 thousand 674 million, distributed in Q125 thousand 662 million of internal debt and Q86 thousand 11 billion foreign debt. As of that month, the indebtedness with respect to GDP was 26.8%, although in December 2022 it stood at 29.2%.
At the level of Central America, Guatemala would have the lowest level with the indicated percentage; the largest is from El Salvador with 76.1%; Costa Rica, 63.5%; Belize, 60.4%; Panama, 54.3%; and Nicaragua, 44.5%.
The projection indicates that the closing of the debt would be around Q230 billion, since a few days ago, Guatemala placed a Eurobond for US$1 billion.
Cost of the basic basket
An issue that is of concern to the general population is the cost of the different products and services that make up the Basic Food Basket (CBA) and the Expanded Basket (CA), which as of the previous May had increased by 15.3% (compared to of the same month of 2022), which directly impacts the purchasing power of families.
Data from the National Institute of Statistics (INE) detail that, on average, the 34 basic products that make up the CBA rose Q497.13 in one year and their cost as of last May was Q3 thousand 731.75.
And the CA, which in addition to food includes expenses such as housing, clothing, education, health, transportation and others, had become more expensive Q1 thousand 147.84, and last May the contribution was Q8 thousand 616.37, much higher than the minimum wage in force for all productive activities during 2023.
No fear of a recession
Amador Carballido, general director of the Guatemalan Exporters Association (Agexport), said that in June 2022 the shadow of a possible global economic recession remained, but now, that perception has moved away, especially due to inflation in the United States, which is already quite controlled.
Regarding the adjustments of the Leading Interest Rate of Monetary Policy in Guatemala (from 1.75% in May 2022 to 5% in May 2023) and the movements authorized by the US Federal Reserve, the manager clarified that there is no need to be alarmed, in the sense that, if it decreases there, the Guatemalan central bank will also do so (as has happened).
“And while the reaction to rates does have an effect on economic activity, the question is what is the worst evil? Inflation with economic growth that can be blurred or slow down a bit (of the economy)? That is the token in the air. With the measures that have been adopted, it is possible to attenuate internal inflation. With the imported one, you don’t have control”.
He added that it is the right path at this time and it was necessary, although it may have an economic slowdown effect on the rest of the year.
