Guatemalans save more as real interest rates rise

• Source: Xinhua
• [14:52 July 22 2009]
• Comments

Guatemalans who are in a position to save are putting away more money and keeping less in checking accounts as real interest rates soar to 5.1 percent, according to news reaching here.

Short term savings have risen 6.2 percent to 46.7 billion quetzals (5.7billion US dollars) during the first half of the year, according to the Bank of Guatemala.

Meanwhile cash deposits have fallen 1 percent to 28.8 billion quetzals (3.5 billion US dollars).

Guatemala's average interest rate is 5.73 percent, or around 5.1 percentage points more than inflation, which was 0.62 percent in June.

The rate has been positive since March, something that last happened in October 2006 and lasted no more than two months. Savings have not increased by more than inflation since 2003.

Experts told Guatemalan media that the increase in savings is especially striking because the nation is suffering a recession, triggered by the economic crisis in main trading partners Mexico and the United States, and a steep fall in overseas earnings from remittances, a mainstay for many Guatamalan families.

In June, the central bank reported that remittances were 9.5 percent lower than the same period in 2008, breaking a trend for double digit growth that is at least eight years old.

Remittances are Guatemala's top foreign exchange earner, ahead of exports and tourism.