Guatemala

The Country

Guatemala is situated in Central America and is known as the land of eternal spring, for its natural beauty. The country suffered a devastating civil war from 1960 until 1996 and although the country is making progress, there are still a lot of social problems related to high unemployment. Many men from the area smuggle their way into the US and although some of them send money back, some are never heard of again. This has led to a shortage of skilled labour and a population made up mostly of women and children.

Thanks to prudent macroeconomic management, Guatemala has been one of the strongest economic performers in Latin America in recent years, with a GDP growth rate of 3.0 percent since 2012, and 4.1 percent in 2015. Economic projections for 2016 show that the country will grow by 3.6 percent.

This Central American country has made significant progress in achieving macroeconomic and democratic stability after the 36-year civil war. Since the signing of the Peace Accords in 1996, the country has improved its access to international markets through several trade agreements.

Nevertheless,  Guatemala, the biggest economy in Central America, has one of the highest inequality rates in Latin America, with some of the worst poverty, malnutrition and maternal-child mortality rates in the region, especially in rural and indigenous areas.

According to World Bank estimates, if Guatemala grows at a rate of 5.0 percent in each of the next few years and that growth does not come at the expense of the poor, the marginal impact on poverty and equity will be significant. The poverty rate would fall by an additional 1 percentage point by the end of 2016, enabling an additional 160,000 people to escape poverty.

Public investment is essential to achieving Guatemala’s development goals, yet it remains constrained by a lack of resources. Additionally, the government collects the lowest share of public revenues in the world relative to the size of its economy. Boosting growth will depend upon continued reforms to mobilize increased private investment and revenue to fund important pro-growth investments in infrastructure and human capital.

An increasingly important challenge for Guatemala is improving the levels of citizen security. High levels of crime and violence represent staggering economic costs for the country.