Overview

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. In 2016, the country’s economy grew by 2.9 percent, according to the latest estimates, and is expected to grow by 3.2 percent in 2017.

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 07, 2017

On November 18, 2016, the World Bank Group Executive Board approved the new Country Partnership Framework (CPF) for 2017-2020, whose pillars are fostering inclusion of vulnerable groups and addressing bottlenecks to sustainable growth.

The new CPF has five specific objectives:

  • Increase Access to basic health, nutrition and water and sanitation services
  • Improve public resource management and accountability
  • Enhance the enabling environment and increase access to finance for MSMEs
  • Expand infrastructure
  • Build institutional capacity to manage and adapt to climate change

The World Bank’s current portfolio in Guatemala totals over US$693.8 million, including US$450 million from the International Bank for Reconstruction and Development (IBRD) and US$243.8 million from the International Finance Corporation (IFC) for the development of the private sector.

Through its institutions, the World Bank Group supports such diverse aspects as transparency and efficiency of the tax administration, violence prevention, fight against malnutrition, improved governance, renewable energies, the development of agriculture, industry and services and the financial sector.

Last Updated: Apr 07, 2017

Promoting Competitiveness:

World Bank technical and financial assistance through the Competitiveness Project  was instrumental for strengthening the National Competitiveness Program (PRONACOM) and the operational startup of the INVEST in Guatemala agency, which succeeded in facilitating $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; 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 to 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: Apr 07, 2017


LENDING

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

*Amounts include IBRD and IDA commitments