Economic and Political Overview

flag Guatemala Guatemala: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Guatemala GDP grew by 3.4% in 2022, mainly driven by net exports and remittances from the U.S., which were powered both by the country's economic growth and falling unemployment among the Guatemalan population in the United States. Remittances represent around 30% of household income, and their boost should continue to support household consumption, which accounts for 85% of GDP. Furthermre, according to the IMF, GDP growth rates are expected to remain somewhat stable in the next couple of years, with an estimated growth of 3.2% in 2023 and 3.8% in 2024. Guatemala's economy receives strong financial support from the U.S. and multilateral lenders; is bolstered by free trade agreements with the U.S. and the E.U.; enjoys a privileged proximity to Mexico and the U.S.; and is recognised as a country with high potential in multiple sectors (tourism, agriculture, mining, hydroelectric and geothermal energy).

Guatemala's public deficit closed at -2.5% of GDP in 2022, and is projected to stay stable in 2023 (-2.4%) and 2024 (-2.2%). Public debt reached 30.1% of GDP in 2022 and should also remain relatively unchanged in 2023 (30%) and 2024 (29.7%). Inflation increased to 6.4% in 2022 and should decrease to 5.6% in 2023 and 4.3% in 2024. The return of inflation rates to the middle of the government's target window should continue to support consumption in 2023, allowing the central bank to maintain its expansionary policy and facilitating the growth of credit to the private sector, in keeping with the current administration's pro-business agenda. Nevertheless, Guatemala's challenges are numerous: social and political instability, poor infrastructure, corruption, vulnerability to external factors (natural disasters and commodity prices), reliance on low value-added industries and remittances, low fiscal revenues, and a range of social issues that include rural poverty, inequalities, underemployment, informality, and ethnic divisions. The absence of a redistributive fiscal policy also hinders attempts to reduce inequality. Although the pandemic has significantly impacted the Guatemalan economy, the country has been recovering, with the government implementing measures to counteract the economic crisis resulting from it.

The unemployment rate in Guatemala reached an estimated 4% in 2022, nearly double the rate of 2019, mainly due to the impacts of the pandemic - particularly in the construction sector, services, and transport. In addition, the country's informal sector grew 60% according to Guatemala's Labor and Social Security Minister. Furthermore, more than half of the population live below the poverty line. The country also has one of the highest rates of malnutrition in the world, one quarter of its adults are illiterate, there is a high level of income inequality, and there is a high rate of organised crime and drug trafficking related violence.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 95.00102.77111.38119.49128.17
GDP (Constant Prices, Annual % Change) 4.13.43.53.63.7
GDP per Capita (USD) 5,0985,4075,7486,0486,362
General Government Balance (in % of GDP) -1.7-1.7-1.7-1.9-2.0
General Government Gross Debt (in % of GDP) 29.228.327.928.028.1
Inflation Rate (%) n/a6.35.54.14.0
Current Account (billions USD) 1.322.451.951.611.20
Current Account (in % of GDP) 1.42.41.81.40.9

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Guatemala doesn't have many natural resources, but the country still has some reserves of petroleum, land for agriculture, and some small mineral deposits. Main industries in Guatemala include production of coffee; production of textiles, paper industries, petroleum, pharmaceutical products, and rubber processing; and tourism. The country - which has a small mining industry - extracts copper, zinc, iron and nickel - also has strong geothermic and hydroelectric potential. The agricultural sector accounts for 9.4% of GDP and employs 31.3% of the active population. Besides coffee, Guatemalan agriculture involves sugar, bananas, cotton, rubber, cardamom and a variety of precious woods and fruits. In recent years, farm communities - mostly indigenous - have been displaced by land inequality, low plantation wages, and due to food insecurity in the palm oil industry. The agricultural sector grew in 2022, as it benefit from high commodities prices, including palm oil, rubber, and coffee.

The industry sector accounts for 22.2% of GDP and 18.7% of employment. More than half of the economic activity in Guatemala occurs within four sectors: manufacturing, commerce, private service, and agriculture. The industry is primarily focused on producing the following products: textiles, furniture, petroleum, sugar, processed foods, and chemicals. In 2022, the industry sector recorded a good performance, particularly in construction, as the sector remained extremely busy due to heightened public investment in infrastructure and increased investment in the sector as a whole.

The service sector represents the largest share of GDP (62.1%) and employs 50% of the population. Key sectors include tourism, health care, customer service, financial services, banking institutions, hospitality, communications, and retail. Tourism is one of the country’s most important sectors, bringing in billions of dollars every year. However, the sector suffered enormously in the last couple of years due to the pandemic. Still, the tourism sector experienced a significant growth in 2022, - with the entry of tourists in the country growing by 72% in January 2022 in relation to the same month in 2021 - a path which it is set to continue on in the coming years.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 29.2 22.1 48.8
Value Added (in % of GDP) 9.3 22.6 62.0
Value Added (Annual % Change) 2.6 4.6 4.6

Source: World Bank - Latest available data.

 

Find more information about your business sector on our service Market Reports.

 
 
Monetary Indicators 20162017201820192020
Guatemala Quetzal (GTQ) - Average Annual Exchange Rate For 1 MUR 0.210.210.220.220.20

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
64/100
World Rank:
75
Regional Rank:
15

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Regional integration is a priority of Guatemalan foreign policy, and trade represents 49.9% of GDP. However, poverty, violence, and political uncertainty remain the greatest obstacles to increased trade. Guatemala is the 92nd largest exporter and the 75th largest importer in the world. The country mainly exports bananas (6.8%), coffee (6.8%), palm oil (5.1%), nutmeg (4.8%), and cane or beet sugar (3.7%); while imports include petroleum oils (11.6%), motor vehicles (4.7%), telephone sets (3.1%), and medicaments (2.5%).

Guatemala's main trade partners are the United States, El Salvador, Mexico, China, Honduras, Nicaragua, and Costa Rica. Guatemala is one of five countries in the Central American Common Market (CACM) along with Costa Rica, El Salvador, Honduras, and Nicaragua. The country is also a member of Central American Integration System (SICA). The European Union supports this integration process, which was one of the conditions of an agreement between the two regions. Guatemala is, after Nicaragua, the second largest recipient of European cooperation aid in Central America and benefits from the Generalised Scheme of Preferences.

In 2021, exports of goods reached USD 13.7 billion, while imports stood at USD 26.6 billion. As for services, Guatemala imported USD 4.2 billion, while exported USD 2.9 billion. Overall imports registered a 22.1% increase from the previous year, and exports grew by 11.7% over the same period. As a result, Guatemala had trade deficit of USD 10.8 billion concerning the trade of goods, which is slightly lower than the overall trade deficit including services, which amounted to USD 12 billion.

 
Foreign Trade Indicators 20182019202020212022
Imports of Goods (million USD) 19,69919,88218,20526,60732,116
Exports of Goods (million USD) 10,76911,17511,52113,75315,695
Imports of Services (million USD) 3,5413,6412,8264,0885,455
Exports of Services (million USD) 3,7073,6792,5862,9043,900
Imports of Goods and Services (Annual % Change) 3.94.9-5.819.54.4
Exports of Goods and Services (Annual % Change) -0.40.2-7.510.37.0
Imports of Goods and Services (in % of GDP) 28.827.924.831.835.7
Exports of Goods and Services (in % of GDP) 18.217.616.317.719.0
Trade Balance (million USD) -7,985-7,967-6,314-10,887-14,186
Trade Balance (Including Service) (million USD) -7,819-7,929-6,554-12,070-15,789
Foreign Trade (in % of GDP) 47.045.541.149.554.7

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
United States 32.3%
El Salvador 13.0%
Honduras 10.0%
Nicaragua 6.3%
Mexico 4.4%
See More Countries 34.0%
Main Suppliers
(% of Imports)
2022
United States 32.0%
China 18.2%
Mexico 10.1%
El Salvador 3.3%
Costa Rica 2.5%
See More Countries 33.8%

Source: Comtrade, Latest Available Data

 
 

Main Products

15.8 bn USD of products exported in 2022
Coffee, whether or not roasted or decaffeinated;...Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion 7.1%
Bananas, incl. plantains, fresh or driedBananas, incl. plantains, fresh or dried 6.8%
Palm oil and its fractions, whether or not refined...Palm oil and its fractions, whether or not refined (excl. chemically modified) 5.8%
Cane or beet sugar and chemically pure sucrose, in...Cane or beet sugar and chemically pure sucrose, in solid form 5.1%
Jerseys, pullovers, cardigans, waistcoats and...Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted (excl. wadded waistcoats) 3.3%
See More Products 72.0%
32.1 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 13.9%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 3.1%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 2.4%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.4%
Motor vehicles for the transport of goods, incl....Motor vehicles for the transport of goods, incl. chassis with engine and cab 2.0%
See More Products 76.2%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import Export Flows.

 
 

Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Official list of ministries (in Spanish)
Ministry of Economy (in Spanish)
Ministerio de Relaciones Exteriores (in Spanish)
Ministerio de Comunicaciones, Infraestructura y Vivienda (in Spanish)
Chamber of Industry (in Spanish)
Chamber of Commerce (in Spanish)
Statistical Office
National Institute of Statistics (in Spanish)
Central Bank
Central Bank of Guatemala (in Spanish)
Guatemalan Banking Superintendence (in Spanish)
Stock Exchange
Guatemala Stock Exchange (in Spanish)
Search Engines
Guatemalaweb
Guatemarket.com
Economic Portals
Deguate (Spanish only)

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Political Outline

Current Political Leaders
President: Alejandro Giammattei (since 14 January 2020)
Vice President: Guillermo Castillo (since 14 January 2020)
Next Election Dates
Presidential and parliamentary: 25 June 2023
Main Political Parties
Guatemala has a multi-party system, though several larger parties typically dominate politics. The main political parties include:

- National Unity of Hope Party (UNE): centre-left, Christian, nationalist
- Vamos: right-wing, conservative, liberal
- Valor: right-wing, conservative, populist
- Commitment, Renewal and Order (CREO): centre-right, nationalist, conservative
- Guetemalan National Revolutionary Unity (URNG): left-wing to far-left, socialist, populist
- National Convergence Front (FCN): right wing, nationalist, conservative
- Vision With Values (ViVa): right wing, Christian
- National Advancement Party (PAN): right-wing, conservative

Type of State
Republic based on a constitutional democracy.
Executive Power
The President is both the Chief of State and Head of Government, and is elected by popular vote for a single term of four years. He/she holds the executive powers, which include implementing the law and running the day-to-day affairs. The Council of Ministers is appointed by the President.
Legislative Power
The Guatemalan legislative power is unicameral. Parliament, known as the Congress of the Republic, has 160 members who are elected by popular vote for a term of four years. The country's constitution provides for the separation of executive, legislative, and judiciary powers. Even though the president cannot dissolve parliament, he/she has the power to veto acts of parliament which, in turn, can be overridden by a legislative supermajority.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
116/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Guatemala, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: December 2023