Economy of Guatemala

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Economy of Guatemala

Currency	Quetzal (GTQ)
Fiscal year	Calendar year
Country group	Developing/Emerging[1] Upper-middle income economy[2]
Statistics
Population	18,863,135 (2023 est.)[3]
GDP	$85.985 billion (nominal, 2021 est.)[4] $153.322 billion (PPP, 2019 est.)[4]
GDP rank	66th (nominal, 2019) 75th (PPP, 2019)
GDP growth	3.1% (2018) 3.6% (2019e) −3.0% (2020f) 4.1% (2021f)[5]
GDP per capita	$4,880 (nominal, 2022 est.)[4] $8,705 (PPP, 2019 est.)[4]
GDP per capita rank	103rd (nominal, 2019) 116th (PPP, 2019)
GDP by sector	agriculture: 13.3% industry: 23.4% services: 63.2% (2017 est.)[3]
Inflation (CPI)	4.2% (2020 est.)[4]
Population below poverty line	59.3% in poverty (2014)[6] 48.8% on less than $5.50/day (2014)[7]
Gini coefficient	48.3 high (2014)[8]
Human Development Index	0.629 medium (2022)[9] (136th) 0.453 low IHDI (2022)[10]
Labour force by occupation	agriculture: 31.4% industry: 12.8% services: 55.8% (2017 est.)[3]
Unemployment	2.5% (2017)[11] 5.0% youth unemployment (2017)[12]
Main industries	sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber, tourism[3]
External
Exports	$11.12 billion (2017 est.)[3]
Export goods	sugar, coffee, petroleum, apparel, bananas, fruits and vegetables, cardamom, manufacturing products, precious stones and metals, electricity[3]
Main export partners	United States 33.8%  El Salvador 11.1%  Honduras 8.8%  Nicaragua 5.1%  Mexico 4.7% (2017)[3]
Imports	$17.11 billion (2017 est.)[3]
Import goods	fuels, machinery and transport equipment, construction materials, grain, fertilizers, electricity, mineral products, chemical products, plastic materials and products[3]
Main import partners	United States 39.8%  China 10.7%  Mexico 10.7%  El Salvador 5.3% (2017)[3]
Current account	$1.134 billion (2017 est.)[3]
Gross external debt	$22.92 billion (31 December 2017 est.)[3]
Public finances
Government debt	24.7% of GDP (2017 est.)[3]
Budget balance	−1.3% (of GDP) (2017 est.)[3]
Revenues	8.164 billion (2017 est.)[3]
Expenses	9.156 billion (2017 est.)[3]
Economic aid	$250 million (2000 est.)
Credit rating	Standard & Poor's:[13][14] BB+ (Domestic) BB (Foreign) BBB- (T&C Assessment) Outlook: Stable Moody's:[14] Ba1 Outlook: Stable Fitch:[14] BB+ Outlook: Stable
Foreign reserves	$11.77 billion (31 December 2017 est.)[3]
All values, unless otherwise stated, are in US dollars.

The economy of Guatemala is a considered a developing economy, highly dependent on agriculture, particularly on traditional crops such as coffee, sugar, and bananas.^[15] Guatemala's GDP per capita is roughly one-third of Brazil's.^[16] The Guatemalan economy is the largest in Central America. It grew 3.3 percent on average from 2015 to 2018.^[17] However, Guatemala remains one of the poorest countries in Latin America and the Caribbean, having highly unequal incomes and chronically malnourished children. The country is beset by political insecurity, and lacks skilled workers and infrastructure. It depends on remittances for nearly one-tenth of the GDP.^[18]

The 1996 peace accords ended the 36-years-long Guatemalan Civil War, and removed a major obstacle to foreign investment. Since then Guatemala has pursued important reforms and macroeconomic stabilization.^[19] On 1 July 2006, the Central American Free Trade Agreement (CAFTA) entered into force between the United States and Guatemala. It has since spurred increased investment in the export sector.^[20] The distribution of income remains highly unequal, with 12% of the population living below the international poverty line.^[21] Guatemala's large expatriate community in the United States, has made it the top remittance recipient in Central America. These inflows are a primary source of foreign income, equivalent to nearly two-thirds of exports.

Guatemala's gross domestic product for 1990 was estimated at $19.1 billion, with real growth slowing to approximately 3.3%. Ten years later, in 2000, it rose from 1 to 4% and by 2010 it had fallen back to 3%, according to the World Bank. The final peace accord in December 1996 left Guatemala well-positioned for rapid economic growth.^{[22][citation needed]}

Guatemala's economy is dominated by the private sector, which generates about 85% of GDP.^{[citation needed]} Most of its manufacturing is light assembly and food processing, geared to the domestic, U.S., and Central American markets. In 1990 the labor force participation rate for women was 42%, later increasing by 1% in 2000 to 43% and 51% in 2010. For men, the labor force participation rate in 1990 was about 89%, decreased to 88% in 2000, and increased up to 90% in 2010 (World Bank). Self-employment for men is about 50%, while the rate for women is about 32% (Pagàn 1).

Over the past several years, tourism and exports of textiles, apparel, and nontraditional agricultural products such as winter vegetables, fruit, and cut flowers have boomed, while more traditional exports such as sugar, bananas, and coffee continue to represent a large share of the export market.^{[citation needed]}Over the past twenty years the percentage of exports of goods and services has fluctuated. In 1990 it was 21% and in 2000, 20%. It increased again in 2010 to 26%. On the other hand, its level of imports of goods and services has continually increased. In 1990 its imports of goods and services was about 25%. In 2000 it increased by 4% up to 29%, and in 2010 it increased up to 36%. Migration is another important avenue in Guatemala. According to Cecilia Menjivar, remittances are "central to the economy." In 2004 remittances to Guatemala from men's migration to the U.S. accounted for approximately 97% (Menjivar 2)......

The United States is the country's largest trading partner, providing 36% of Guatemala's imports and receiving 40% of its exports.^[23] The government sector is small and shrinking, with its business activities limited to public utilities—some of which have been privatized—ports and airports and several development-oriented financial institutions. Guatemala was certified to receive export trade benefits under the United States' Caribbean Basin Trade and Partnership Act (CBTPA) in October 2000, and enjoys access to U.S. Generalized System of Preferences (GSP) benefits. Due to concerns over serious worker rights protection issues, however, Guatemala's benefits under both the CBTPA and GSP are currently under review.^{[citation needed]}

The country is predominantly poor, with 49 percent of the population living in rural areas. Guatemala is characterized by a markedly unequal distribution of wealth, assets, and opportunities: between 2000 and 2014, rural poverty increased from 74.5 to 76.1 percent, while extreme rural poverty increased from 23.8 to 35.3 percent. Young people and indigenous communities are the most vulnerable. Among indigenous people, who comprise almost 40 percent of the total population, the poverty rate is approximately 80 percent.^[24]

The Inequality-adjusted HDI (IHDI) index for Guatemala is 0.481 (Data from 2019), below the average for Latin America (0.596) and distant from the countries with very high human development (0.800).^[25]