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 a 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.

The World Bank study Poverty Assessment in Guatemala reported that the country reduced its poverty rate from 56 percent to 51 percent between 2000 and 2006. However, official figures indicate that poverty rose to 59.3 percent in 2014. The situation is particularly difficult in nearly half of the country’s rural municipalities, where eight out of 10 people are poor, according to the 2011 Rural Poverty Map.

Given Guatemala’s capacity for macroeconomic recovery, the next few years represent an opportunity to reduce poverty through more rapid economic growth. While pro-poor policy reforms could yield marginal improvements, accelerating growth will be crucial to achieving the country’s medium- and long-term social objectives.

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.

Last Updated: Sep 20, 2016

The World Bank designed the Country Partnership Strategy (CPS) for 2013-2016 in coordination with the Government of Guatemala and subsequently consulted representatives of civil society, the private sector and the international community. Currently, the World Bank is working with the government to prepare the new CPS for 2017-2020.

The current CPS was also designed in close coordination with the Inter-American Development Bank (IDB) to ensure complementarities and consistency.

The 2013-2016 CPS focused on two strategic objectives:

  • Strengthen public policies for social development.
  • Promote inclusive and sustainable economic growth.

These objectives include initiatives to create fiscal space for social spending and improve the transparency and efficiency of social programs, as well as to strengthen disaster risk management, improve infrastructure and logistics to facilitate economic activity and increase productivity in rural areas and of small and medium-sized enterprises. Two key issues for Guatemala’s development —citizen security and gender equality— were mainstreamed in all CPS initiatives.

Last Updated: Sep 20, 2016

Promoting Competitiveness

World Bank technical and financial assistance through the Competitiveness Project  was instrumental in strengthening the National Competitiveness Program (PRONACOM) and the operational startup of the INVEST in Guatemala agency, which facilitated $944 million in new foreign direct investments, resulting in the creation of 73 new firms and 24,000 new jobs between 2005 and 2008.

The Project to Support a Rural Economic Development Plan improved the competitiveness of rural value chains with strong indigenous participation and strengthened the institutional capacity of public entities through the adoption of a land management model. Results of this project include the creation of 200 new value chain associations; an increase of US$20.3 million in these associations’ total sales, and support for the development of 324 municipal development plans.

The study Toward Better Public Spending: a Review of Public Spending in Guatemala analyzed the quality of Guatemala’s public expenditures in education, health and citizen security, as well as other sectors. The study found that targeting of social spending can be improved given that public education and health expenditures do not benefit regions with the greatest need. The review also identified a need to boost resources to improve citizen security, especially for preventive programs and police forces, as well as improved capabilities of the public prosecutor’s office, penitentiary and rehabilitation systems.

Promoting Social Development

The Maternal-Infant Health and Nutrition project helped to provide access to basic health and nutrition services for over one million people through the building or renovation of 35 health centers for maternal and child care, training of more than 5,000 health workers and support for the preventive nutrition program Comprehensive Community Care of Children and Women (AINM-C) in 142 jurisdictions, among other activities. The maternal mortality rate declined by more than 50 percent between 2006 and 2012 in the intervention areas, while the percentage of pregnant women who received prenatal care increased from 54 percent in 2006 to 89 percent in 2012.

Through the Project to Strengthen the Resilience of the Maya and Rural Residents Facing Food Insecurity and Climate Change in Guatemala’s Arid Corridor,  the World Bank is helping the population to confront climate change though ecologically-sensitive, lower-cost production systems, which increase productivity levels and contribute to food security. Project beneficiaries include 1,600 families living in the departments of Baja Verapaz, El Progreso and Jalapa.

Last Updated: Sep 20, 2016


Guatemala: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments