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. The country’s economy grew by 2.8 percent in 2017 and 3.0 percent in 2018, according to the latest estimates, and is expected to grow by 3.3 percent in 2019.
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. Of all people living in poverty in the country, 52 percent are indigenous.
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.
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: Apr 04, 2019