She brings with her roughly 75 home-grown elotes in a big basket and sells as many of them as she can for Q5 each until nightfall. Now lets suppose she sells just 50 of them (though from our own observations, she rarely many leftovers), she can expect an income of Q250 every day for six days of the week, which translates into approximately Q6000 a month.

To put this in context, the entry level salary for the policemen based in the street behind her is around Q3000 pcm.

A senior accountant in Guatemala City on the other hand, will earn up to Q12,000 a month, but this entails a full day’s work and a proportion of this will be taken by the state in tax.

I doubt very much whether the SAT gets so much as a whiff of the elotera’s earnings and she is likely to be pelando la mazorca for other reasons as well: for example she flogs off the tusas and shilotes to the guy who keeps horses for the tourist carriage rides, and makes a few extra ‘pesos’ from premium products such as chuchos.

Now, let’s go back to the image above. Doesn’t she look just a little bit folorn there? Of course she does, because pity is very much… (continue reading)

Now Spain, with an economy four times the size of Greece, has been downgraded.  And Portugal is a worse credit risk than Lebanon or Guatemala.

To put things in perspective, public debt is about 15% of Guatemala’s GDP, but over 100% of Greece.  While first world nations will dig the hole deeper, printing money in order to subsidize irresponsible public spending, poor developing nations like Guate-who can’t borrow much-will be forced to make responsible decisions.  Where do you think the future is?

I suspect things will actually get worse, so the end of year number may be close to 1% contraction.  So, what do we care?

Well, for one, most recessions leads to a slowing in the inflation rate, which should mean that most things will either not rise in price or will actually get cheaper.  If you’re looking to buy real estate around Antigua, I wouldn’t look for a drop in prices, because they’d rather cut off their arm than acknowledge market forces.  However, food, wages and domestic goods should be stable.

Unemployment will also rise, aggravated by returning/deported migrants who don’t have any more opportunity in the US than they do here.  After all, the US is contracting at a rate twice that of Guate, and the illegals are the first to suffer, since they lack access to social safety nets and formal employment assistance.

Carolina López, representante de Promotora Turística Panamericana (PTP), señaló que las ventas de paquetes bajaron hasta un 70 por ciento, las personas ya no están viajando a Guatemala debido a la crisis, el temor a contagiarse de la gripe A H1N1, y el escándalo del asesinato del abogado Rodrigo Rosenberg que le dio la vuelta al mundo y asustó al viajero de negocios (ejecutivos e inversionistas).

If your Spanish is worse than mine and you don’t know how to use Google Translate, this article claims tourists are not coming because they’re  worried about the economic crisis, H1N1/FNASF, and the scandal involving the assassination of the attorney who said those unpleasant things about President Colom.

You may recall that in a previous post I mentioned that the Guate economy appeared to be holding strong.  If this is still true and the tourist dollars are off, it confirms what I’ve suspected; people are still coming but they’re spending less.  I guess if you’re a backpacker, it doesn’t really matter whether the DOW is at 9,000 or 3,000, but all you baby boomers appear to be a little nervous, and with good reason; we haven’t seen the bottom yet.

Even if the number is half that, it means Guatemala is doing better than you might expect.  Keep in mind a true recession is ‘negative growth’, so you would expect to see actual contraction rather than growth.  I wonder what the inflation rate is, because if they start printing money like the US and Europe are doing, inflation will go from low single digits where they have been to mid double-digits overnight.

Of course, if you are a contrarian economist like me, you realize that with inflation rates higher than growth rates, you’re like a person who consumes only junk food until he’s full; you’re slowly killing yourself but thinking you’re fine simply because you’re full.  I suspect inflation rates in the US, in particular, are much higher than the official numbers, which is why people always feel pinched.

What I’ve learned here wouldn’t surprise any experienced businessman, viz., the businesses with strong management, good market niches and a well-executed marketing plan aren’t suffering like those who lack in one of these key areas.   For example, while some long-time businesses in town are off 50% from this time last year, other businesses are off by a fraction of that, or even flat.  Newer businesses, still in a growth phase, are still growing, although perhaps less than the 20% annual rate they experienced last year.

I hadn’t seen any actual figures until I ran across this blog entry, which indicates Guatemala’s tourism numbers are actually up 4% over last year.  When you consider H1N1/FNASF, the economic crisis and the constant bad news about this country, it’s pretty incredible, and reinforces for me how Antigua is unique as a destination (and place to live).