The International Monetary Fund (IMF) maintains economic growth estimates for Guatemala in 4.1%, according to the review released on Tuesday, April 22 in the presentation of the “World Economics Perspectives (Weo)” report.
The position that the IMF announced also remains in the range that the monetary, exchange and credit policy project of a growth between 3% to 5% with a central value of 4%.
Although the context is favorable in the current conditions provided by the financial agency, there are signs about the performance of the future indicator, especially due to the incidence of the US tariff policy, according to analysts consulted by the free press after knowing the result.
The IMF based in Washington DC, indicates that for the Central American block the growth will be 3.8%, which will be greater than 2% estimated for the Latin American and the Caribbean region in this exercise.
What does it mean?
Paul Boto, executive director of the Freedom and Development Foundation, indicated that in this report the international agency improved the growth perspective of Guatemala to 4.1%, since in its October estimates of last year it was 3.6% in 2025.
In his opinion, this improvement in the growth perspective may be due to the United States applying the 10% tariff to Guatemala, the lowest possible. However, although comparatively Guatemala is better than other countries, the 10% tariff involves losing the benefits provided by the Free Trade Agreement (FTA) for almost two decades.
“Production will be” hurt “in that complex context and its understanding growth could be between 3% and 3.5%. I am less optimistic than the IMF”
Paul Boto, Executive Director of the Freedom and Development Foundation
On the other hand, the US growth prospects deteriorated and our connection with that economy is evident.
“A few months ago nobody imagined that the greatest commercial war would begin since the thirties, which will impact world trade, increasing costs, affecting supplies chains and discouraging the mood of consumers,” said Porto.
He added that production will be “hurt” in that complex context and its understanding growth could be between 3% and 3.5%. “I am less optimistic than the IMF,” he insisted.
Along the same lines, Maynor Cabrera, analyst at the Economy for Development Foundation, stressed that Guatemala operates in the international market and any adjustment affects for better or worse. “These recent adjustments will weaken our economic growth prospects, possibly affect private investment in the face of greater uncertainty and if growth decline is stronger it can affect us in the price of exports,” he said.
The transmission effect
Although the position is favorable for Guatemala, the consulted indicate that some signals can be given in the short term, but everything will depend on the evolution of the economy of the United States.
Cabrera, indicates that it is likely that in the short term it will not be seen in such a marked way because there is a “very strong enters of remittances” and the economic situation has been stable and Guatemala is not a very important destination for foreign direct investment. However, if the United States economy weakens, this can quickly affect as happened in the 2008-2009 period.
For bite, in the short term the export sector is the most affected at the moment, due to the immediate increase in the price to its consumers in the United States. Some would have to absorb part of the tariffs in order not to affect the demand too much.
“The worst is uncertainty. We lost the certainty in the rules of the game that the FTA gave us and ceased to be reliable. We entered an era of arbitrariness in international trade and small countries such as Guatemala, we could be the most affected,” he said.
Start preparing and prudence
In the construction of scenarios, analysts also make some recommendations for economic agents and decision makers to the result released by the IMF.
The manager of the Freedom and Development Foundation is the idea that the new investments or the expansion of the existing ones could be affected. Companies should wait until they have more clarity from the extremes to which this commercial war will reach.
“In the short term it is not seen in such a marked way because there is a very strong remittance entry and the economic situation has been stable and Guatemala is not a very important destination for foreign direct investment. However, if the United States economy weakens, this can quickly affect as happened in the 2008-2009 period”
Maynor Cabrera, analyst at the Economy for Development Foundation
Considers that an optimistic scenario would be that this shock It lasts a few months and then the United States feels satisfied with the results obtained by the countries and returns to a new balance.
But another map would be that this game of removing and putting tariffs extends, which would damage “the world economy.”
Cabrera, mentions that on the part of the central government it is important to improve infrastructure at the national level, strengthen the domestic market and explore the diversification of commercial partners by Guatemala.
In a joint work of the public sector and productive forces, they must discuss how to face future challenges, since it is possible that some bets that have been promoted in Guatemala for many years can be little successful in the current framework or before changes in the coming years in the rules of the world trade game.
Box
United States influence
Álvaro González Ricci, president of Banguat explained to Press Free that the world economic growth by 2025 was reviewed down the IMF from 3.3% to 2.8%. This review was mainly influenced by the United States that decreased from 2.7% to 1.8%.
In the above, he said, influences the imposition of tariffs and commercial war with China, all of which would be affecting world trade and reducing economic growth conditions in most advanced economies, but also emerging and developing economies.
He reiterated that, in the case of Guatemala, the planned growth of the economy is in a range of between 3% and 5%, with a central value of 4% in 2025.
Then, in the light of the new growth figures of the main commercial partner, which is the US, local projections must be reviewed. However, the president of the central banking that must be taken into account that the factors that explain the growth “are fundamentally internal including private consumption, an increase in investment and also in public spending, which could partly compensate the lower growth planned for the United States, that, of course, without neglecting that the tariff imposed to Guatemala has notable effects on the costs of exports to the US market” stressed.
He concluded that the director-manager of the IMF Kristalina Georgieva this is a slowdown scenario, not recession.