Economic trends
The violence caused by organized crime, drug traffickers and impunity, but also by inequality and poverty (which affects more than half of the population), is the main problem facing the country. Guatemala often suffers from natural disasters (volcanoes, hurricanes, earthquakes), nevertheless has a significant potential for tourism, agriculture, hydrology and mineral extraction.
Since 2011, the Guatemalan economy, which had been with Panama the only country to have avoided a recession in 2009, has shown economic indicators reflecting good macroeconomic and financial stability. The resumption of international trade and the measures adopted by the government allowed the economy to grow 2.4% in 2010 and 2.8% in 2011. However, the outlook remains uncertain due to the slowdown in U.S. growth.
Raising the level of budgetary resources is essential to enable the country's development through investment in physical infrastructure as well as in the social sectors. However, the tax burden is only 10% of GDP. Reforming the tax system should enable the state to improve tax collection and deal with its current deficit. The country faces many challenges, including crime and corruption, which represent barriers to tourism and business.
On the social level, Guatemala faces a difficult situation: more than half of the population lives below the poverty line (53% in 2011), the country has one of the highest rates of malnutrition in the world, and there is a strong inequality in income.
Main branches of industry
The agricultural sector accounts for 11.3% of the GDP, it employs more than one third of the active population and accounts for over 70% of the country's exports.
The country produces and exports mainly coffee, sugar, bananas, cotton, rubber, cardamon and a variety of precious woods and exotic fruits. The country has a small mining industry and extracts copper, zinc, iron and nickel.
The industry sector accounts for approximately 29.2% of the GDP and employs 23% of the population. It stands mainly from textiles, paper industries, pharmaceutical products, as well as rubber transformation industries. It has to be noted that since Guatemala's entry into the Free Trade Area of the Americas (FTAA) created by the United States, the advantages in customs have brought an increment in investments and the establishment of American companies in the country.
The service sector represents the largest part of the GDP, accounting for 59.5%. The tourism industry is very dynamic and continues to grow.
International trade
Foreign trade represents more than 50% of the Guatemalan GDP. Guatemala is one of the five countries of the Central American Common Market (CACM) along with Costa Rica, El Salvador, Honduras and Nicaragua. The FTAA (or ALCA) agreement was signed by Guatemala in 2004. This agreement is characterized by an advantageous customs union for the Central American countries, Mexico, the United States and Canada.
The United States is the country's indispensable trading partner. As its largest client and supplier, it is also the second largest bilateral provider (behind Spain) of development assistance and receives about 1.4 million Guatemalan emigrants whose remittances account for 11% of GDP.
The main exports are coffee, sugar, oil, textiles, fruits and vegetables and cardamom. The main clients of Guatemala are the United States, El Salvador, Honduras, Mexico and Costa Rica.
The main import partners are the United States, Mexico, China, El Salvador and South Korea. The country's trade balance is structurally in deficit, a trend that should continue.
Regional integration is a priority of the Guatemalan foreign policy. The country is a member of System Integration in Central America (SICA). The Union Europenne supports this integration process and it was one of the conditions of a bi-regional agreement. Guatemala is, after Nicaragua, the second largest recipient of European cooperation in Central America and benefits from the communitarian Generalised System of Preferences.
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Last updates: May 2012
