Monday, March 9, 2009

Confidence in the Economy Remains Low

Pessimism about the future of the Guatemalan economy continues, as evidenced by the Índice de Confianza de la Actividad Económica (Index of Confidence in Economic Activity) produced by the panel of analysts from the Bank of Guatemala (Banguat). The index fell 60 percent in one year.

The monthly index (preliminary data) last February was at 14.29, implying a decrease of 21.40 percent over the previous month and 60 percent over the same month last year.

85.7 percent of the analysts felt that the economy will not improve within in six months. In January this parameter was at 100 percent.

Similarly, 57.1 percent believe it is a bad time to invest in the country and an equal percentage believe that the business climate will worsen over the next six months. In both cases the response was slightly more positive in January.

The index for February is the second lowest since December 2003.

Regarding inflation, the panel of analysts expected to fall by next February to 7.37 percent and that for March and April reaching, 7.06 percent and 6.70 percent, respectively, and 2009 ending with the cost of living increase at 6.74 percent for 2009. The increase in cost of living for 2010 is predicted to be 5.97 percent.

The panel of analysts puts economic growth for this year at 2.6 percent. In January, the estimate was 2.9 percent, which is below the margin provided by Banguat which is between 3 and 3.5 percent.

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