Guatemala: Short Term Stability, Long Term Challenges

CENTRAL AMERICA - Report 25 Sep 2014 by Francisco de Paula Gutierrez

In the short term, the outlook for Guatemala is stable. Growth is expected to be 3.5%-4% in 2014-2015, and inflation is projected to come in within the Bank of Guatemala’s 4.0% ± 1 p.p. target band. Exchange markets are not likely to be volatile, and fiscal and external imbalances will be fairly manageable, at 2%-2.5% of nominal GDP. So, there’s not much need to worry about stability during the rest of the Otto Pérez Molina administration, though we’ll hear the traditional noise around next year’s electoral campaign. But there will be challenges in the long run, over growth, poverty, security and human development, in a country riven by large ethnical and cultural differences.

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