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The economy stagnated in November, causing a lack of confidence towards the end of 2023

The economy stagnated in November, causing a lack of confidence towards the end of 2023

According to the latest assessment by the Bank of Guatemala (Banguat), the two indicators that determine the short-term performance and perception of the Guatemalan economy by agents and decision-makers closed somewhat stagnant last November.

The above, although the economy as measured by GDP would have closed at 3.5%, as officially stated in the 2023 Monetary, Banking and Credit Policy Assessment Report, albeit only a quarterly GDP closing. For the third quarter, by 3.7% on an annual basis.

Imai lowered

The IMAI's function is to measure the real performance of the economy in the short term, and the report indicates that it reached 2.8% in November, higher than the 1.6% recorded in October, but a level observed at the beginning of 2021, when the index reached 1.3% (January of that year), specifically when the so-called “boom” effect or recovery of the economy occurred after the epidemic. In November 2022, the index reached 3.5% and in October 3.7%.

As of November 2023, growth has been recorded in the productive sectors of trade and vehicle repair; Financial and insurance activities; Real estate; Information and communication; Accommodation and food service; Electricity, water and sanitation supply.

But in October there was negative performance for five sectors: accommodation and food services; building; Exploitation of mines and quarries; Transformative Industries. Transportation and storage.

In an interview with free press, Paulo de León, director of economic and financial intelligence at the Central American Business Intelligence Company (CABI), commented that the blockades and protests recorded will show a much slower period in terms of production, as happened in the last quarter of 2023. “Already there has been Trapon to the economy in terms of cash flow,” not to mention that it was one of the reasons that stopped making investment decisions.

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Less confidence

Separately, the Icae Index is an index that aims to measure the perception of confidence of economic actors in the business and investment climate of the country and when it exceeds 50 points, there is said to be an improvement in this rise; But when it is lower, it reflects a level of hesitation or uncertainty that can even affect future investment plans, and thus other indicators.

In the December measurement, it closed at 47.06 points, and although it was higher than 46.62 points in November and 43.06 points in October, the index remained below the expansion zone. During the year, only in June did it reach a high score of 53.89 and again in October a low of 43.06 points.

Based on the results, in the Economic Outlook Survey conducted by a team of analysts from the private sector as of December, the question was asked: How do you think the business climate will develop for productive activities in the private sector in the next six months compared to the past six months? Months? 17.7% thought the situation would improve; 52.9% will remain the same; And 29.4% say the situation will get worse.

Moreover, 76.5% considered that the country's economy is currently no better than it was a year ago, and 23.5% stated that it is; While 64.7% believed that the country's economic development will not improve during the next six months, and 35.3% said yes.

Finally, 52.9% stated that they are not sure about the current situation for companies to make investments, and 47.1% said that this is a bad time.

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