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

Guatemala has demonstrated resilience in the face of numerous crises. The economy has remained robust, benefiting from a steadfast adherence to prudent policies characterized by low fiscal deficits and debt-to-GDP ratios, along with ample international reserves. Additionally, substantial remittance inflows have further bolstered economic stability. Following a notable recovery in 2021, Guatemala's economic momentum has tapered off, with GDP growth halving to a steady 4.1% in 2022. Guatemala's robust growth trajectory persisted in 2023, with real GDP estimated to have expanded by 3.4%, thanks to credit expansion and higher remittances directed towards the private sector. The IMF anticipates that in 2024, GDP growth will revert to its potential rate of 3.5%, propelled by sustained consumption fueled by strong remittances and credit expansion.

In 2023, the central government's fiscal deficit decreased to 1.3% of GDP, down from 1.7% in 2022, as reported by Fitch Ratings. Despite lower commodity prices leading to reduced import taxes, fiscal revenues remained stable at 12.6% of GDP, indicating sustained progress in administrative enhancements. Expenditures declined to 13.9% of GDP, compared to 14.4% in 2022, largely due to reduced spending on goods, services, and transfers following the presidential elections. Moving forward to 2024, the government will continue operating under the 2023 budget as the 2024 budget, approved by Congress, was suspended due to procedural irregularities. With the current budget constraints in mind, Fitch projects a deficit of 1% of GDP for 2024. Unlike previous years, Guatemala heavily leaned on external debt to address its financing requirements in 2023. This reliance stemmed from legislative gridlock, which caused delays in multilateral disbursements, alongside an increase in local-currency yields due to tightening domestic monetary policies. Public debt declined to 28.3% of GDP in 2023 and should also remain relatively stable in 2024 (27.9%) and 2025 (28% - IMF). In contrast to many regional central banks, BanGuat took a gradual approach in transitioning from accommodative policies, aiming to bring the inflation rate to a neutral level of 5.0% by April 2023, where it has since remained. This unique stance reflects the significant impact of imported goods on inflationary pressures, which have subsided. After reaching a peak of 9.9% in February 2023, inflation reverted to its target range of 4%+/-1pp, closing the year at 4.2%, primarily driven by declines in fuel and food prices (Fitch Ratings).

According to the latest data available by the World Bank, the unemployment rate in Guatemala reached an estimated 3% in 2022. However, 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) 95.00102.04110.04117.99126.59
GDP (Constant Prices, Annual % Change) 4.13.53.53.73.7
GDP per Capita (USD) 5,0985,3695,6785,9716,283
General Government Balance (in % of GDP) -1.7-1.4-1.8-2.4-2.6
General Government Gross Debt (in % of GDP) 29.227.827.628.128.8
Inflation Rate (%) 6.96.24.04.04.0
Current Account (billions USD) 1.242.932.692.261.90
Current Account (in % of GDP) 1.32.92.41.91.5

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 9.3% of GDP and employs 27% 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. According to Central American Business Intelligence, agricultural activity in Guatemala grew 2.1% in 2023.

The industry sector accounts for 22.6% of GDP and 22% of employment. The industry is primarily focused on the following subsectors: coffee production, textiles, paper industry, petroleum, pharmaceutical products, rubber products, and tourism. The manufacturing sector as a whole accounts for 14% of the country’s value-added (World Bank). As per figures from the Cámara de Industria de Guatemala (CIG), the industrial sector activity increased by 4.1% year-on-year in 2023.

The service sector represents the largest share of GDP (62%) and employs 51% 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 due to the pandemic. Still, the tourism sector experienced significant growth in 2023, welcoming 2.65 million foreign tourists, 4% more than the pre-COVID level. Following Panama, Guatemala possesses the second-largest banking sector in Central America, characterized by a notable concentration among its top players. Approximately 93% of the total financial system assets are controlled by the sector's 18 banks, underscoring the dominant position of the leading institutions (BNamericas).

 
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.

 

Return to top

Foreign Trade in Figures

Regional integration is a priority of Guatemalan foreign policy, and trade represents 55% of GDP (World Bank, latest data available). However, poverty, violence, and political uncertainty remain the greatest obstacles to increased trade. The country mainly exports coffee (7.1%), bananas (6.8%), palm oil (5.8%), cane or beet sugar (5.1%), and jerseys, pullovers, cardigans, waistcoats, and similar (3.3%); while imports are led by petroleum oils (13.9%), telephone sets (3.1%), motor cars and other motor vehicles (2.4%), medicaments (2.4%), motor vehicles for the transport of goods (2% - data Comtrade 2022).

In 2022, Guatemala’s main export partners were the United States (32.3%), El Salvador (13.0%), Honduras (10.0%), Nicaragua (6.3%), and Mexico (4.4%). As per imports, they came chiefly from the United States (32.0%), China (18.2%), Mexico (10.1%), El Salvador (3.3%), and Costa Rica (2.5% - data Comtrade). 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 the 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 Generalized Scheme of Preferences.

The country’s trade balance is structurally in deficit. According to data by the WTO, in 2022, exports of goods reached USD 15.7 billion, while imports stood at USD 32.1 billion. As for services, Guatemala imported USD 5.4 billion, while exported USD 3.9 billion. According to the World Bank, the country’s trade deficit reached 16.6% of its GDP in 2022 (from 14.1% one year earlier). Figures from the Banco de Guatemala show that the country’s exports of goods totaled USD 14.2 billion in 2023, against USD 25.9 billion in imports.

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 19,88218,20526,60732,11630,318
Exports of Goods (million USD) 11,17511,52113,75315,69514,199
Imports of Services (million USD) 3,6412,8264,0545,4150
Exports of Services (million USD) 3,6792,5862,8853,8610
Imports of Goods and Services (Annual % Change) 4.9-5.819.54.4n/a
Exports of Goods and Services (Annual % Change) 0.2-7.510.37.0n/a
Imports of Goods and Services (in % of GDP) 27.924.831.835.7n/a
Exports of Goods and Services (in % of GDP) 17.616.317.719.0n/a
Trade Balance (million USD) -7,967-6,314-10,887-14,186n/a
Trade Balance (Including Service) (million USD) -7,929-6,554-12,070-15,789n/a
Foreign Trade (in % of GDP) 45.541.149.554.7n/a

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

 

Main Partner Countries

Main Customers
(% of Exports)
2023
United States 32.3%
El Salvador 13.1%
Honduras 11.4%
Nicaragua 6.9%
Mexico 4.7%
See More Countries 31.5%
Main Suppliers
(% of Imports)
2023
United States 30.3%
China 18.5%
Mexico 10.7%
El Salvador 3.4%
Japan 2.7%
See More Countries 34.5%

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

Return to top

Sources of General Economic Information

Ministries
Official list of ministries (in Spanish)
Ministry of Economy (in Spanish)
Ministry of External Relations (in Spanish)
Ministry of Communications, Infrastructure and Housing (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)
Stock Exchange
Guatemala Stock Exchange (in Spanish)
Search Engines
Guatemalaweb
Guatemarket.com
Economic Portals
Deguate (Spanish only)

Return to top

Political Outline

Current Political Leaders
President: Bernardo ARÉVALO de León (since 15 January 2024)
Vice President: Karin HERRERA (since 15 January 2024)
Next Election Dates
Presidential and parliamentary: June 2027
Main Political Parties
Guatemala has a multi-party system, though several larger parties typically dominate politics. The main political parties include:

- Movimento Semilla: centre-left, progressivist, social-democratic
- Vamos: right-wing, conservative, liberal
- National Unity of Hope Party (UNE): centre-left, Christian, nationalist
- Valor: right-wing, conservative, populist
- Cabal: liberal, centre
- Vision With Values (ViVa): right-wing, Christian
- Todos: centre-right

Other parties include:

- Partido Patriota Nacional (PPN)
- Visión con Valores (VOS)
- Bienestar Nacional (BIEN)
- Compromiso, Renovación y Orden (CREO)
- Victoria (VICTORIA)
- Partido Unionista (UNIONISTA)
- Partido Convergencia (ELEFANTE)
- - Movimiento Cambio (Cambio)
Gran Alianza Nacional (AZUL)
- WINAQ-Unidad Revolucionaria Nacional Guatemalteca (WINAQ-URNG).

Type of State
Republic based on a constitutional democracy.
Executive Power
The President is both the Chief of State and Head of Government. He/she 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 (128 members directly elected in multi-seat constituencies in the country's 22 departments and 32 directly elected in a single nationwide constituency by closed party-list proportional representation vote). 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

 

Return to top

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.

 

Any Comment About This Content? Report It to Us.

 

© eexpand, All Rights Reserved.
Latest Update: April 2024