Bearish Outlook For External Accounts

We maintain our fairly bearish view on Guatemala's external accounts and expect a worsening of the current account deficit over the medium term, forecasting a current account shortfall at 2.2% of GDP in 2011 and 2.3% in 2012, from 1.1% in 2010. While the financial account inflows continue cover the shortfall, uncertainty about political risk surrounding the September 2011 presidential elections could limit foreign investment into the country.

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