The Bank of Guatemala (Banguat) reported that the economy measured by gross domestic product (GDP) would be closing at 3.5 per cent, which is the expected core or central value.
The performance of domestic production would be in line with what was explained by the International Monetary Fund (IMF) that reported last October a closing estimate of 3.5% by 2024 and 3.6% by 2025.
Performance
Álvaro González Ricci, president of the central bank and economic manager Johny Gramajo Marroquín exposed to Prensa Libre as it will close 2024, as well as the performance of short-term indicators that show stability.
Although it was clarified that the budget extension approved in August by Q14 billion and the new budget would lead to simulations that the economy could grow 3.7 % for this year and 4.1 percent by 2025.
In the case of inflation, which is the widespread price rise in the economy, it would be closing at 3 % and 3.75 per cent by 2025, which would be in the target range, which will mean price stability. Exchange rate behaviour would be stable; exports are beginning to regain positive ground and imports at 7 %; international monetary reserves (RIM) with about US$24 billion.
A positive closure is expected; the biggest challenge for countries in the world is inflation, which in Guatemala is now already fixed and the monetary policy interest rate has already fallen by 25 points and the revision is soon at the last session of the year. The increase from 1.75% to 5 % did not generate a sacrifice in the behavior of the economy and the levels of the loans were maintained,” González Ricci said.
The bank cannot be introduced into the speed of these resources and by 2025, a growth of 3.7 % could reach 4.1 %. These enlargements and that in Congress is a stronger budget, let us think that it could be reached at 4.1 percent.”
He recalled that this good closure – and at the same time that there is a state budget with resources, so there is a very good basis for the next year to have a positive performance.
In order to strengthen the economy, the monetary authorities said that it is necessary to continue the legislative economic agenda, such as the process of approving the reforms to the Public Alliances for the Development of Economic Infrastructure; the Securities Markets Act; the bill regulating electronic payments that is still pending submission to the Congress of the Republic, and which was structured with the Ministry of Economy and the Superintendency of Banks, among others.
Sectoral activity
Of the 17 productive activities, there are robust sectors that have increased their expansion, while others have shown weakness.
In the case of construction, it is expected to have a growth of 0.9% and would be less than 3.5 per cent last year, and is attributed to the fact that it is part of a normalization in the sector, since in the previous years it had a strong expansion, especially in private construction in vertical housing or apartment buildings.
Gramajo Marroquín added that although there are construction licenses, it is not expected to be as dynamic as observed in recent years, but the activity will be on positive ground.
On the lower growth of this activity, it is not in the private construction part, but in public construction that is negative, but that in turn presses the activity downwards.
Then there is less dynamism in road maintenance, the construction of new stretches of road, which is the fundamental thing.
In the case of agriculture, growth of 0.6% is projected, and would be associated with the effects of climate change, especially because of the drought that affected the production of African palm oil and the production of sugar that was affected for a period of six months.
Financial and insurance activities would have the highest growth with 7.6 %; human health care activities 6.1 per cent; accommodation and meal services activities 5.1 %.
Risks on the rise
The authorities explained that one of the simulations is that the economy can grow 3.7%, if the resources of the budget enlargement will materialize.
The bank cannot be introduced into the speed of these resources and by 2025, a growth of 3.7 % could reach 4.1 %. These enlargements and that in Congress there is a stronger budget we think could be reached at 4.1 percent, but here depends on the ability of the Executive to be able to materialize those resources, González Ricci said.
He reiterated that, if these resources are allocated a good percentage to roads, rural roads, ports and airports, growth in infrastructure investment will contribute to GDP.
This article has been translated after originally appearing in Prensa Libre