One of the readings of the possible negative effects for productive, investment and labor activity, are provided by Josemaría Echeverría, executive director of the Institute of Economic Competition (ICE). Although the demonstrations and protests ceased on Wednesday night March 19 In Guatemala, There are a number of consequences that generate economic agents, and that will be measured later.
Guatemala experienced a day of demonstrations in October 2023, when the production, distribution and consumption chains were interrupted, which extended for several days and impacted economic growth, that one of the background. In this week it suspended it occurred for two days and the losses are projected at a few thousand 200 million, according to the preliminary count of several business chambers.
The interruption of the terrestrial roads, generated a “deincronization” in the production chains, internal and international sales not made and other indicators that are measured in the “political risk.” In addition, in Guatemala there is a delegation of a country risk agency.
In his opinion, what is the sectorial affectation during and after the manifestations?
Blocks generate a negative domino effect that transversely affects the key sectors of the economy. Industry, trade, construction, transport, services, every hour of interruption translates into losses for consumers, workers and companies.
However, This domino effect has a consequence beyond the immediate and is questioning the country’s reputation in terms of investment attraction and international trade development. Ungovernability and legal uncertainty are capitalized obstacles in the search for a stronger, developed and competitive country.
From the part of competitiveness, what does the interruption of activity mean in a working day?
The involuntary interruption of a working day is not simply a momentary pause in productive activities but a direct and generalized blow for all actors in the country’s economic life.
“This domino effect has a consequence beyond the immediate and is questioning the country’s reputation in terms of investment attraction and international trade development”
Josemaría Echeverría, ICE director
Interrupting the work of millions of Guatemalans is to play with the development of the country, the quality of life of workers and the productivity of companies.
In general terms, stopping the working days with blockages means stopping the supply chain, making the other economic activities that trade and the provision of services take care.
What can be the possible impact on the supply chain?
Supply chains require fluidity and synchronization to ensure proper functioning.
The times, the transport and production conditions must be adequate to maintain that “balance” that allows companies to be productive and distribute their products as required.
Between the immediate and posterior impacts of the blockages, delays in the delivery of essential goods such as perishable foods, medications or combustible can be found.
In a second order, the lack of inputs, raw material and human talent will cause massive losses in industry and commerce if the blockages persist.
In a short term, the effects on production costs arrive and consequently on consumer prices that are unavoidable if production, working hours and merchandise transfer are affected. As a final piece of dominoes, there is a negative impact on the country’s confidence and economic stability.
Event organizers could borrow
The Guatemala event trade union, attached to the Guatemala Chamber of Commerce, announced that around two days of blockades were canceled around a thousand events, of which 70% are of the corporate segment, and the remaining 30% of social events.
The cancellations were for events that were scheduled for this week and for the next one, and apart there were some in which dates were rescheduled.
Apart from the cancellations, for the events that were transferred in date there is also an affectation since it is not known for sure if the event will take place or not, said Juan Fernando Leal, president of the union.
The impact estimates it in losses of Q30 million per day.
Of the estimated 1,000 canceled events, 45.5%, around 450 events, report total cancellation, and 54.5% (about 550) managed to be re -laid.
He explains that more than half of the events were pressed over – among all those that could not be carried out in the previous two days. In many cases it will depend mainly that the place of the event has the new dates available for subsequent realization and that the client maintains its need to do it.
However, the fact that they have new dates already affects the budget planning of both the client’s side and the supplier, since for example in most corporate events there are already payments of advance to suppliers from the organizer.
It is important to highlight the role of the client since if the event is no longer carried out, it can generate not only loss for the organizer but also an unrealized event expressed loyal.
Asked about how many days the sector could recover the events, the Executive said that it is difficult to know since some will no longer be carried out and those carried out can be transferred even to months of the initial date.
Costume and textile receives impact
The counting of sectoral productive losses for this week’s protests continues to be presented and the costume and textile sector counted a consolidated Q27.5 million.
93% of companies attached to the costume and textile sector reported economic losses associated with the protests during this week.
Through an internal survey, the Costume and Textile Commission (Vestex) attached to the Guatemalan Exporters Association (AGEXPORT) reported on the results of the blockades of March 18 and 19 to the production processes that realizes that the impact of the blockages was nine out of 10 companies that recognized that their operations were affected.
The affected companies operate in the areas of Guatemala City; Mixco; Villa Nueva and Amatitlán, which include spinning, textile, preparation, services, accessories and logistics among others, places where protests were carried out.
The information collected, according to the survey, 79% of the workers could not work, 62% decreased their production; 60% could not send products and export; 60% experienced delays in customer product offices and 66% have not received raw materials for transformation.
On economic losses, 71% of factories recorded a negative behavior in the ranges of US $ 50 to US $ 1,000 and the average amount is US $ 85 thousand for a total projected amount of US $ 3.5 million that is equivalent to a few Q28 million during the days of the blockages.