After recovering somewhat in the third quarter from Q2’s seven-year low, economic growth appears to have been more sure-footed in Q4 2017 and is likely to have accelerated slightly. Preliminary estimates released by the Central Bank ahead of Q4 GDP figures put full-year growth for 2017 at 2.8%, suggesting a pick-up in activity at the end of the year. Economicgrowth in Q4 likely benefited from healthy remittance inflows. The stronger economic momentum appears to have carried into this year, with growth in remittances speeding up and private sector confidence improving to a six-month high, according to a survey by the Central Bank. President
Jimmy Morales announced a Cabinet reshuffle on January 16, replacing the ministers for the economy, the environment and social development.
The decision is not expected to have a significant economic impact. Due to a booming U.S. economy, remittances should keep supporting household spending throughout 2018, boosting GDP growth. Government spending is also expected to increase, with a large investment plan in
infrastructure and education announced, despite no approved budget. However, ongoing corruption scandals involving President Morales weigh on the outlook, while further downside risks stem from the possibility of changes in U.S. trade and immigration policies. FocusEconomics panelists
forecast that GDP will grow 3.3% in 2018, which is unchanged from last month’s forecast, and 3.4% in 2019. Inflation receded to 4.7% in January, following December’s 5.7% reading.
Our panelists expect inflation to keep moderating slightly this year, ending 2018 at 4.3%. For 2019, the panel expects inflation to reach 4.2% at the end of the year. REAL SECTOR | Economic activity edges higher in November Economic activity rose 0.17% on a monthly basis in November, according to Banguat’s monthly index of economic activity (IMAE, Índice Mensual de la
Actividad Económica). November’s rise was a deceleration from October’s upwardly revised 0.34% increase (previously reported: +0.29% month-onmonth).
On an annual basis, economic activity grew 3.0%, ticking up from October’s 2.9% reading. November’s reading was largely due to growth in retail and wholesale trade, as well as in the services and manufacturing sectors. Moreover, annual average growth in economic activity was stable from a
month earlier at 3.1%. Banguat expects GDP growth to clock in at between 3.0% and 3.8% in 2018.
FocusEconomics Consensus Forecast panelists expect GDP to grow 3.3% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists
MONETARY SECTOR | Inflation falls back to Central Bank’s target range
in January Consumer prices fell 0.40% from a month earlier in January, contrasting
December’s 0.95% month-on-month increase. January’s reading was largely driven by a fall in food prices—notably tomatoes and onions—and air transport prices. On the other hand, the price of other fresh produce items increased, especially potatoes. Meanwhile, inflation fell to 4.7% in January, from 5.7% a month earlier. This print brought inflation back within Banguat’s target range of 4.0% plus or minus 1.0 percentage point. Furthermore, annual average inflation for the 12 months
through January came in at 4.7%, inching up from 4.3% in the full-year 2017.
The Central Bank expects inflation to end 2018 at 4.3%. FocusEconomics panelists also see inflation ending 2018 at 4.3%, which is up 0.1 percentage points from last month’s forecast. For 2019, our panelists expect inflation to end the year at 4.2%.
EXTERNAL SECTOR | Growth in remittances accelerates in January Remittances from workers abroad grew 8.0% in January from the same mont a year earlier, reaching USD 635 million and accelerating from December’s 6.2% year-on-year expansion.
In the 12 months through January, remittances were stable at December’s cumulative USD 8.2 billion, a joint all-time record. The 12-month cumulative sum of remittances furthermore grew 13.4% in January compared to the same period in the previous year, a slight deceleration from the 14.4% growth rate observed in the full-year 2017.
Remittances, an important source of income for Guatemalan households, account for more than a tenth of the country’s GDP, and the vast majority of receipts originate in the United States. As such, remittances are inextricably tied to U.S. employment trends and the broader health of the U.S. economy. In 2017 and 2018, fresh concerns over the direction of U.S. immigration policy
were in part behind the double-digit surge of remittance inflows. FocusEconomics Consensus Forecast participants see private consumption expanding 3.8% in 2018, which is down 0.2 points from last month’s forecast. For 2019, our panelists expect private consumption to increase 3.7%.
ANÁLISIS ECONÓMICO DE PANAMÁ:
Growth in economic activity accelerated slightly in November on the back of strong growth in trade-related sectors including ports and wholesale trade. November’s print brought cumulative growth in economic activity for the January-to-November period to 5.3%, higher than the full-year print
for GDP in 2016; it highlighted the positive spillovers from stronger global trade dynamics in the economy. Containers handled in Panamanian ports swung from a steep 9.1% contraction in 2016 to a 7.9% increase in 2017, and cargo tonnage in the Panama Canal expanded 22.2% in the 2017 fiscal year, the highest figure on record. In addition, construction of new port infrastructure valued at USD 1.8 billion is set to begin on the Atlantic Coast this year, and the Panama Canal Authority is currently
studying whether to increase daily ship transits from seven to eight in the expanded canal this year.
• The economy is expected to grow at a broadly stable pace this year on increased maritime trade and an ambitious public spending program. An improved economic outlook for the region bodes well for Panama’s service sector and growth outlook. FocusEconomics Consensus
Forecast panelists project that the economy will grow 5.5% in 2018, which is unchanged from last month’s forecast. The panel expects GDP will expand 5.4% in 2019.
• Inflation inched up from 0.4% in November to 0.5% in December. Our panelists expect inflation to end 2018 at 1.5%, which is down 0.1 percentage points from last month’s forecast. For 2019, panelists project
inflation of 1.9%. The monthly indicator for economic activity (IMAE, Índice Mensual de Actividad Económica) inched up from 4.1% year-on-year growth in October to 4.2% in November. In cumulative terms, economic activity expanded 5.3%
annually in the January–November period (January–November 2016: +4.4% year-on-year).
According to the National Comptroller’s Office, November’s print came on the back of expansions in all but two components of the index. Commerce, transportation and communications, and mining and quarrying were the components that grew the most. Faster growth in wholesale trade drove the
expansion in commerce, and higher cargo movements in Panamanian ports and ship transits through the Panama Canal supported growth in transportation and communications. In contrast, private healthcare and fishing were the only two components that declined in the surveyed month.
On a month-on-month basis, growth in economic activity came in at 0.6% in November, matching the print observed in October. Annual average growth in economic activity in November remained steady at the 5.2% increase observed in October.
FocusEconomics Consensus Forecast panelists project that the economy will grow 5.5% in 2018, which is unchanged from last month’s forecast. The panel foresees GDP expanding 5.4% in 2019.
MONETARY SECTOR | Inflation picks up moderately in December Consumer prices rose 0.19% month-on-month in December, contrasting the 0.19% drop observed in November. According to the National Comptroller’s Office (Contraloría General de la República), December’s print reflected
higher prices in 5 of the 12 components of the index, which more than offset lower prices in 5 other categories. December’s increase was primarily driven primarily by higher prices for transportation.
Inflation inched up from 0.4% in November to 0.5% in December. Because of Panama’s dollarized economy, authorities lack the freedom to use monetary policy or exchange rate adjustments to influence inflation. Meanwhile, annual average inflation edged down from 1.0% in November to 0.9% in December.
FocusEconomics Consensus Forecast participants expect inflation to end 2018 at 1.5%, which is down 0.1 percentage points from last month’s projection. For 2019, panelists project inflation of 1.9%.
FUENTE: Por Focus Economics - https://www.focus-economics.com/ - Desde Barcelona España