Guatemala City, -AGN. – The International Monetary Fund -IMF- noted in its official report Guatemala’s consistent track record of prudent and significant macroeconomic policies during 2023.
According to the document, “Guatemala’s solid track record of prudent macroeconomic policies and large remittance inflows provided the country with large buffers to weather a challenging global environment and tightened global financial conditions.”
These are the conclusions of the IMF’s 2023 Article IV Consultation with Guatemala and approved the staff’s assessment.
Remittances
The article stated that Guatemala’s real GDP growth in 2022 was 4.1% (3.4% for 2023), with a fiscal deficit of less than 2% of GDP and a public debt balance of less than 30% of GDP.
Domestic private demand remained firm, while bank credit to the private sector registered double-digit growth rates.
Furthermore, the currency has remained stable, and the external balance has remained solid, despite the high total import bill.
The financial sector is resilient to tightening global economic conditions and domestic interest rate hikes.
Positive Outlook
In general terms, the outlook remains positive, but risks persist. In a short time, these risks relate to an abrupt slowdown in global economic activity, including in the United States, which could reduce remittance flows and harm domestic demand and growth in Guatemala.
The country’s long track record of economic achievements and prudent policies has been to its benefit. If sustained, they will further strengthen the resilience of the country’s economy against shocks.
The Guatemalan economy continues to offer significant opportunities such as:
- The implementation of a transformative infrastructure agenda.
- The promotion of human resources and social policies.
- Increase in legal stability.
These are essential to support a sustainable and inclusive growth model in the medium term, with higher potential growth, by taking advantage of the demographic and accelerating reforms to improve the business climate and attract foreign investment.
Bank of Guatemala Declares
According to the evaluation, the Guatemalan economy continued to show resilience in 2022, with economic growth exceeding its potential.
The president of Bank of Guatemala stated, “It also underscores that the country’s macroeconomic and financial stability remained stable despite an adverse global context, such as the Russia-Ukraine war.”
The IMF reported that the continued buoyancy of family remittances and bank credit for the private sector contributed to the continued strength of personal spending.
It highlighted that the country has solid fundamentals due to the management of conservative economic policies, as evidenced by a moderate tax deficit, a low ratio of public debt to GDP, and a historical record of international reserves, contributing to the country’s exchange rate stability.
The report concludes by stating that Guatemala is an economy with multiple opportunities and that efforts must continue to attract foreign investment and reduce the infrastructural and human resources challenges.
Likewise, to continue promoting the initiative Guatemala Moving Forward, which has made major progress in economic legislation, investment attraction, and export strategy.
The IMF pointed out the importance of promoting social policies that meet the population’s needs and encourage an environment of greater legal security. This would lead to sustainable and inclusive growth with higher growth potential in the mid-term.
