Low-Debt Guatemala Boasts It’s the ‘Germany of Central America’

(Bloomberg) -- Guatemala is the “Germany of Central America” whose low debt burden makes it resilient to the turbulence roiling global markets, according to the central bank.

The nation’s Germanic-style hostility to debt has left it in good shape to weather potential shocks, according to the the bank’s vice-president Jose Alfredo Blanco. At 24 percent of gross domestic product, Guatemala’s public debt levels are among the lowest in the world.

“When the fiscal deficit passes two percent, everyone screams to high heaven," Blanco said Thursday, in an interview in Guatemala City.

Guatemala’s wealthier neighbor Costa Rica has seen its borrowing costs soar in recent weeks, as investors fret over the government’s ability to pass a fiscal reform to narrow its deficit of 7.4 percent of GDP. Guatemala’s budget deficit will widen to 1.5 percent of GDP this year, from 1.3 percent in 2017, Blanco said.

Growth will accelerate to 3 percent this year, from 2.8 percent last year, boosted by higher loan growth to the private sector and higher government infrastructure spending, Blanco said. The bank estimates that growth may accelerate further to between 3.1-4.1 percent next year.

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