Possible recession in the US

A dominant uncertainty about Tariff implementation It is generating global movements that suggest changes to economic projections, as well as a lack of confidence of consumers and business activity on a global scale.

In Guatemala, the monetary authorities keep the economic growth prognosis of 4% as a positive central value, But it will be in April when the first official review is carried out, which will surely include these global components.

Everything indicates that economic turbulence, in commerce and in the global market that can have a direct and indirect influence in Guatemala and the initial call is to tranquility by officials and analysts can be coming.

Change of forecast

In this context, the Organization for Economic Cooperation and Development (OECD), based in Paris France reviewed its economic growth forecasts associated with the effect of the commercial conflict generated by the president of the United States, Donald Trump, especially with the tariff measures that have been implemented for Canada and Mexico. The three countries are commercial partners with Guatemala.

Then the OECD already warns that the Mexican economy would enter a recession in 2025 by means of a contraction of the GDP of -1.3% with the imposition of tariffs. The same trend will occur for Canada that positions it at 0.7% for this exercise. And for the US, it already foresees a growth of 2.2%.

While the United States Federal Reserve (Fed), keeps rates, but degraded the growth and inflation forecasts and warned of greater “uncertainty.”

How is it interpreted for Guatemala?

In the Guatemalan context there are already reactions and for the moment the authorities indicate that it is a modest adjustment and analysts consulted are attributed to uncertainty.

“The OECD review is down. The world economy in 2025 would grow 3.1% instead of 3.3%, taking into account the greatest global uncertainty, the review is actually very modest. The growth of the United States was reviewed from 2.4% to 2.2%, also very slight,” said Álvaro González Ricci, president of the Bank of Guatemala (Banguat).

Fundesa: Weakens perspectives

Fernando Spross, associate researcher at the Guatemala Development Foundation (Fundesa) argues that the world economy remained resilient in 2024, expanding to 3.2% during the second semester.

However, the most recent indicators of economic activity indicate a decay of the global growth perspectives, promoted by a weakness of business and consumer confidence in some countries. But at the same time, inflationary pressures persist in many economies, as well as the increasing political uncertainty.

To all this, the commercial conflict climbed by the United States with China, Canada and Mexico is added, and cuts its expectation of GDP growth. “It can be said that, Economic forecasts are marked by the uncertainty that has taken over trade And the world geopolitics, which will end up slowing growth, ”said Fundesa’s analyst.

Agexport: Barriers reaction

The export sector has begun to generate its contingency interpretations after knowing the OECD position in terms of world GDP would grow 3.1% and no longer 3.3% that was the initial one, as well as the 2.2% forecast for the US economy. UU., And not 2.4% as planned.

“It is natural for international trade to show symptoms of contraction when financial barriers such as tariffs are implemented, since these are a detractor of commercial exchange and a protective measure for local industry ”explained Jacobo Pieters Chief of the Market Intelligence Unit of the Guatemalan Association of Exporters (AGEXPORT).

In their opinion, these effects do not imply that international trade stops, but experiences a capital redistribution and commercial flows.

In this context, the coach reiterates that Guatemala can benefit from the reconfiguration of international trade through various strategies, such as the replacement of suppliers affected by tariffs, the use of commercial tools such as the Free Trade Agreement (FTA) between Central America and the US. Nearshoring and market diversification.

Then all this can allow Guatemala to capture a part of the trade that the United States currently holds with Mexico, strengthening its role as a key trade partner.

A recessive cycle is discarded

Guatemala monetary authorities indicate that the Fed considers that the United States would grow this year 1.7% instead of 2.1%, being a growth closer to the consensus of international experts.

“Certainly the Fed stressed the greatest uncertainty, but indicated that, although the probability of a recession has increased, that is not its base scenario. In terms of inflation its prognosis by 2025 is 2.7%, upward revision with respect to the previous projection of 2.5%, partly reflecting the effect of higher tariffs on US imports,” González Ricci added.

The Fundesa researcher coincides with the position of the central bank and reinforces the message that, The US economy is being marked by uncertainty and complex international context. “To the extent that the commercial war initiated by Trump climbs and affects jobs in the medium term, will end up braking growth,” Spross said.

While Pietters is one of the idea that Fed has warned about greater economic uncertainty, reflected in a reduction in growth forecasts to 1.7% by 2025 and an increase in 2.7% inflation projection. “This situation is directly related to the imposition of tariff barriers, since naturally you are barriers they translate into an increase in the cost of consumer products,” he said.

In his opinion, when the US, imposes tariffs on products from Mexico, Canada and other international markets, the import cost is raised, which impacts the final prices for US consumers and generates greater inflationary pressure. This explains the sensation of greater inflation in the US market, derived from the increase in essential products that previously entered with lower costs.

In this commercial protectionism environment, US business partners must adjust their strategies. And for Guatemala, this panorama opens a window of opportunity to position itself as an alternative provider of goods that were previously imported from Mexico, mitigating the impact of tariffs on the US consumer and generating a new space for Guatemalan exports.

Positive forecast for Guatemala

Given this global environment, the growth of the economy for Guatemala in this exercise remains positive, but in the following weeks a review will be carried out.

González Ricci stressed: “In the case of Guatemala we estimate that 4% is the most likely scenario, since the drivers (the drivers (the drivers (drivers) of that growth are domestic such as private consumption, investment and public spending. ”

Spross is more direct and mentions that, on the one hand, it means that, in the face of fear, the nationals in the United States will continue to send remittances to Guatemala at the levels at which they have been doing it in recent months, and the purchase activity that is generated (consumption).

However, clarifies that in general terms a reduction in economic growth forecasts and Exports for our country, on the contrary, there is a great growth potential in sectors such as textile, manufacturing, and services among others.

In addition, great opportunities for growth and investment derived from the approval of laws that have already occurred and others are expected, such as the Road Infrastructure Law, Competition Law, Law of the Port System, Reform to the Public-Private Alliance Law, as well as the tender of the electricity sector, to hire the generation of 1 thousand 400 megawatts in a medium term.

Contingent measures

Given this situation of uncertainty, the AGEXPOR has already prepared a contingent program, as of the thesis of a possible impact of foreign trade.

• If a country like the US increases tariffs to certain commercial partners (for example, Mexico or Canada), the cost of importing goods from these countries increases, reducing bilateral trade with them.
• Tariffs are incorporated into the analysis of international trade through a commercial resistance factor, which represents additional costs such as taxes and regulations, encouraging the search for new suppliers.

How can Guatemala benefit from trade deviation?

• Redistribution of trade and capture of Mexican exports.
• Tariffs to Mexican products will naturally reduce Mexico’s exports to the US, which will generate a redistribution of trade.

Guatemala can take advantage of this deviation from trade to become a strategic provider in products that Mexico traditionally exports to the US, such as:

• Fresh fruits and vegetables (avocados, tomatoes, peppers).
• Textiles and preparation (cotton clothes and products).
• Electronic components and auto parts.
• Agroindustrial products and processed foods.

If Guatemala strengthens its logistics infrastructure and its production capacity, you can replace part of the products that the US is currently important from Mexico.