Guatemala Grew 4.5% in the First Quarter. The IMF Thinks That Is the Peak.

Economy

Key Facts

—The number. Guatemala’s real GDP grew 4.5% in the first quarter of 2026, against 3.8% a year earlier.

—The leader. Construction grew 7%, the fastest of the 17 tracked activities, helped by a public-private motorway.

—The forecasts. The central bank projects 4.1% for the year. An IMF mission cut its call to 3.75% on the oil shock.

—The implication. For the IMF number to hold, the next three quarters must average about 3.5%.

—The supports. Formal employment rose 4.8% to about 1.82 million, inflation ran at 2.86% in May, reserves cover 11 months of imports.

—The context. Public debt sits near 27% of GDP, and Guatemala is one notch below investment grade at all three agencies.

Guatemala GDP growth reached four and a half percent in the first quarter, which is both genuinely good news and higher than anyone expects the year to finish.

The central bank published the national accounts update yesterday. Real output for January to March rose four point five percent, against three point eight in the same quarter of 2025.

Quarterly output came to about a hundred and sixty-four billion quetzales. Eight of seventeen tracked activities explained roughly seventy percent of the variation.

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What is behind the Guatemala GDP growth figure

Construction led at seven percent, followed by financial services and insurance at six point seven, and accommodation and food at five point four. Manufacturing, public administration, real estate, commerce and agriculture clustered between four point three and four point five.

The central bank names a specific project behind the construction number: the Escuintla to Puerto Quetzal motorway, built as a public-private partnership.

That is worth pausing on, because it is a forty-one kilometre road worth about a hundred and fifty-four million dollars, and it is the country’s first infrastructure partnership of its kind. One road is visible in the national accounts.

Which tells you two things at once. The project model works, and the economy is small enough that a single motorway moves the quarterly numbers.

The forecasts say this is as good as it gets

The central bank’s full-year projection is four point one percent. The first quarter came in four tenths above that path.

An IMF mission is gloomier, having cut its 2026 call to three point seven five percent on the Middle East oil shock. Run the arithmetic and the implication is stark: for that number to hold, the remaining three quarters must average about three and a half percent.

That is a full percentage point below what Guatemala just delivered. Even the central bank’s own downside case, where a prolonged crisis shaves two tenths off growth to three point nine, sits above the IMF’s baseline.

The disagreement is not about the first quarter, which everyone can see. It is about how fast the oil shock arrives.

Why oil hits through the wrong door

The central bank makes a useful distinction here. Exports are not the transmission channel for the oil shock; imports are.

Guatemala buys fuel, so a higher crude price raises the import bill and shows up first in prices rather than in output. Growth would only suffer if trading partners slowed enough to cut their demand for Guatemalan goods.

The buffers are unusually solid for the region. Inflation ran at two point eight six percent in May, inside a target of four percent plus or minus one, and the policy rate has sat at three and a half percent since February.

Formal employment reached about one point eight two million people affiliated to social security, up four point eight percent on the year. Remittances passed eleven and a half billion dollars by mid-June, and reserves cover roughly eleven months of imports.

The awkward part of the fiscal record

Guatemala closed 2025 with a deficit of one point nine percent of output against three point eight budgeted. That sounds like discipline, and it is partly something else.

The undershoot came largely from moderate execution of capital spending — the state did not spend what it had allocated to build things. Meanwhile construction, driven substantially by public works, is the fastest-growing activity in the economy.

So the country is drawing its strongest growth from precisely the budget line it struggles to disburse. That is the case for the partnership model in one sentence, and also the argument the rating agencies keep making.

Guatemala sits one notch below investment grade at all three major agencies, with debt near twenty-seven percent of output. What holds it back is governance and execution rather than arithmetic.

Is 4.5% Guatemala GDP growth sustainable this year?

Neither the central bank nor the IMF expects it to be, projecting four point one and three point seven five percent respectively for the full year. The IMF figure in particular implies the remaining quarters average around three and a half percent, a marked slowdown from the first quarter.

How does Guatemala compare with the region?

It grows roughly twice as fast as Latin America as a whole, which the World Bank puts near two point three percent for 2026. Even on the IMF’s reduced forecast Guatemala would outpace the regional average by a wide margin.

What is the biggest risk to the forecast?

A prolonged oil shock, which reaches Guatemala through a higher fuel import bill and therefore hits inflation before output. The central bank estimates a sustained crisis would cost about two tenths of a percentage point of growth, taking its projection from four point one to three point nine.