Tuesday, April 14, 2009

Macroeconomic Indicators Deteriorating

The impact of the global financial problems became apparent in the first quarter of this year in Guatemala. A decline in business led to a decline in inflation, slower growth in exports, falling imports, and falling remittances sent to Guatemala from overseas.

Imports in March of this year fell 29 percent, exports grew just 4.1 percent, remittances fell 7.1 percent, and tourism increased by 2 percent.

However, it's interesting to note that despite the declines the inflow of dollars entering the economy is greater than the outflow of dollars. Banguat's balance as of March 26 was plus $656.3 million.

While the macroeconomic indicators have deteriorated, Guatemalan monetary authorities are not declaring a recession. A recession is defined as a drop in GDP (Gross Domestic Product) for two consecutive quarters, and that has not occurred.

Banguat has revised the projected economic growth figures. Back in December, growth was projected at 3 to 3.5 percent. On March 25th, the projection was scaled back to 1 to 2 percent. Experts agree that these figures may still be optimistic because the full impact of the global crisis is unknown.

Paulo De Leon, a researcher at Central American Business Intelligence, noted that growth this year could be between 0 and 1 percent.

Forecasts based on past crises are not adequate since the factors that have driving the current crisis are new. And there is political manipulation from not wanting to admit the seriousness of the crisis.

Eric Daniels, professor of economics at Clemson University USA, found that there is a delay in the impact of the crisis in a country and the length of the slowdown could be several years.

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