The official report indicates that the economic activity measured by the Imae, recorded a growth of 3% in July, while in July 2023 it was 5%. The report states that the July result was influenced by the positive performance of activities such as trade and vehicle repair; real estate activities; financial and insurance activities; information and communications and manufacturing industries.
Then, the accumulated growth to July is 3.4%, according to the figures, and the Imae has as its function to measure the real performance of the economy in the short term. So far this year in January and May, the indicator stood at 4.4% that have been the highest and in March 2.4% that is the lowest, according to the series.
Álvaro González Ricci, president of the Bank of Guatemala (Banguat) explained that production, with an accumulated variation of 3.4%, “is consistent with the closing estimate of economic growth for this year in a range between 2.5% and 4.5%, with a central value of 3.5%” as of December 2024.
Consistent result
Raúl Bouscayrol, president of the Chamber of Industry of Guatemala (CIG), commented that the interannual variation of the Imae as of July, of 3.4%, shows a slight deceleration in relation to the same month of the previous year, and is quite consistent with the growth potential that Guatemala has.
“Manufacturing industries had a positive performance, which reflects the resilience of industries in the country, despite the challenges faced in July, such as the sinkhole at Km. 44 of the Palín-Escuintla highway that began to affect from mid-June and the logistical challenges in port matters,” he said.
Bouscayrol added that there are factors that are limiting the growth potential, such as road infrastructure and the situation in ports, especially in the Pacific Ocean.
The effect of climate change predominates
Another of the indicators that the JM learned about was the performance of foreign trade (exports and imports), in which the effects of climate change are already perceived in the agricultural export activity.
Exports in general in July stood at US$8,638.3 million, which means a -0.9% drop compared to the same period last year, when they stood at US$8,720.3 million.
In this regard, González Ricci pointed out that exports showed a reduction of -0.9%, which, even in negative territory, show a recovery compared to the previous year where exports fell -9.4%.
“Exports have shown a lower growth, particularly in sugar and in fats and other fuels, the latter associated with palm oil, in both cases production has been affected by climatic factors,” noted the president of the central bank.
“The manufacturing industries had a positive performance, which reflects the resilience of the industries in the country, despite the challenges faced in the month of July, such as the sinkhole at Km. 44 of the Palín-Escuintla highway that began to affect from mid-June and the logistical challenges in port matters”
Raúl Bouscayrol, president of the Chamber of Industry of Guatemala (CIG)
Foreign sales continue to be led by clothing items for US$940.7 million; coffee US$691.2 million; Bananas US$561.6 million; sugar US$475.3 million and edible fats and oils -which mostly come from palm- US$379.3 million.
Regarding imports, they showed a growth of 6.6%, reaching US$18,645 million, or US$1,152.4 million more than what was registered in July of last year, when it was US$17,492 million.
Projections in palm oil
When consulting José Santiago Molina, president of the Gremial de Palmicultores de Guatemala (Grepalma), he explained the reasons why there has been a decrease in exports is related to the effects this year of the El Niño phenomenon.
Official figures indicate that there is a drop in foreign currency for palm oil exports of 39%, since in July of this year US$379 million were computed, while in the same period of 2023 the amount was US$625 million.
The director assured that in general terms due to the El Niño phenomenon there was less fruit and less extraction, in the period from January to May associated with a water deficit, and that in turn caused the abortion of plantations, so it can also compromise production for one or two following years.
So, as there is less fruit and extraction, a lower production is expected in that part.
In June and July there has already been rain, and in August the conditions were already normal. In the case of the plantations on the South Coast, there are irrigation systems, so the impact has been less compared to the north.
Molina assured that there is a decrease in exports due to less production, but clarified that the supply for the local market is guaranteed.
Estimates indicate that this year there will be a lower production of around 20% associated with the El Niño phenomenon, and estimates still point to production of about 800 thousand tons of palm oil, of which about 200 thousand are to meet domestic demand and another 600 thousand tons will be destined for export.
Production in other years is around one million tons of palm oil, but this year there will be a reduction, and it will impact exports.
International context
Among the analyses that the Monetary Board (JM) learned about is the international context, especially related to the performance of the United States economy, which is Guatemala’s main trading partner.
“In the international context, it was mentioned how the electoral process is going in the United States of America where according to the polls the two most important candidates, Kamala Harris and Donald Trump, are practically in a technical tie; It was indicated that the expansive fiscal situation in the United States of America is not expected to change much over the next three years, based on the recent review of the credit rating by Fitch Ratings, which maintained the rating of the United States at AA+ with a stable outlook,” concluded González Ricci.
This article has been translated after first appearing in PrensaLibre