As COVID Cases Spike, the Guatemala Economy Hangs in the Balance

Central America’s battered economies cannot take much more indecision, lack of real leadership, lack of imagination, and flip flopping. Countries with zero government help for the poor and unemployed need some kind of alternative to perpetual lockdown. Here, Nestor Quixtan offers a brief glimpse into Guatemala’s economic situation.

With the recent spike in confirmed COVID-19 cases in Guatemala, the prospect of re-opening the country seems a distant proposition.

Just three weeks ago, the Guatemalan government was already beginning to put plans in place to re-open its borders and re-activate its economy. But the exponential increase in cases since then has forced the government to slam on the brakes. To continue the driving analogy, it’s not only slammed on the brakes; it’s done a screeching handbrake turn to reverse its reopening policy.

Central government has doubled down on lockdown by extending the curfew at weekends and restricting car usage. Odd-numbered plates can circulate one day and even-numbered the next.

Already long-suffering businesses were not expecting this curveball. The government had begun to unveil reopening guidelines. To have that hope disappear is particularly devastating, as laid-off/furloughed employees and informal workers begin to starve.

The tourism sector, in particular, had already made their reopening guidelines public.

INGUAT, Guatemala’s tourism institute, had presented a series of best practices to ensure proper sanitary measures for hotels, restaurants, transport companies, and tour operators. A marketing campaign to boost domestic tourism had already started. And down the line, IGUAT was looking to entice foreign travelers to rediscover Guatemala.

But with the government’s doubling down on the lockdown, domestic tourism is over before it starts. And there’s zero chance of international travelers coming anytime soon. 

Recently, Guatemala’s central bank (BANGUAT) published its quarterly economic performance indicators. To the surprise of no-one, Guatemala’s economy shrank by over 10% in April.

The tourism sector on its own also dropped by almost 10% during the same period. Note though, that there’s some flawed methodology going on here. BANGUAT’s data put restaurants and hotels in the same category.

One should also note that the government is using hotel space to keep asyptomatic COVID-19 patients in isolation. Many hotels have been very adamant about keeping their involvement in housing COVID patients under wraps. They do not wish for people to see them as “contaminated” in any way.

The biggest blow to tourism has been the delay in the reopening of Guatemala City’s international airport.

Originally, the government had announced it would reopen for domestic flights by mid-June. International flights within Central American would resume sometime in early July. Guatemala’s aviation authorities had already issued orders to prep the airport for reopening.

But this all changed with the sudden spike in cases in early June.

Guatemala’s authorities have now issued a Notices to Airmen (NOTAM) bulletin that it plans to reopen its international airport by August 15. But with all the uncertainty, airlines are now pressuring the Guatemala government and civilian aviation authorities to make up their minds once and for all.

As Guatemala’s tourism sector, and economy by extension, hang in the balance, it seems like there is no end in sight.                                                                                                                                                                      

The government seems dead set to maintain the lockdowns despite overran hospitals and overworked health staff collapsing from exhaustion.

With deaths piling up, health authorities out of ammo, unemployment and hunger soaring, and remittances plummeting, it’s only a matter of time before the wheels begin to come off.

Only time will tell if Guatemala can recover by 2021 as the government touts over and over.

In the meantime, hotels, restaurants, and tour operators wonder if they will make it to the end of the month, let alone the end of the year.

Nestor Quixtan is a Canadian/Guatemalan economist, linguist, and writer. He lives in Guatemala City.