Overview

  • Guatemala has experienced continued economic stability that can be attributed to a combination of inflation targeting, prudent fiscal management and managed floating exchange rate. The country has been a solid economic performer in recent years, with a GDP growth rate of 3.1 percent in 2016, 2.8 percent in 2017 and 3.1 percent in in 2018. The country’s economy is expected to grow by 3.3 percent in 2019 and 2.8 percent in 2020.

    Strategically located, with substantial natural resources and a young multi-ethnic population, Guatemala has enormous potential to generate growth and prosperity for its people.

    But Guatemala’s stability has not translated into growth acceleration to close the income gap with rich countries. In fact, poverty and inequality in the country are persistently high, and high rates of childhood stunting threaten Guatemala’s ability to reach its full development potential.

    Poverty, measured at the upper middle-income class line (US$5.5 per person per day in 2011), increased between 2006 and 2014 from 43.4 to 48.8 percent, adding almost 2 million people into poverty. Extreme poverty (having less than US$1.9 per person per day) affected 8.7 percent of the population in 2014, almost half a million more people than in 2000. Given the slow reduction in the poverty rate, the number of people living in poverty is projected to increase by more than 175,000 between 2019 and 2021.

    Inequalities persist across geographical areas and among ethnic groups, with Indigenous Peoples continuing to be particularly disadvantaged as the 2018 census re-confirms. In essence there are “two Guatemalas”, one with well-off, and one poor, one urban and one rural, one Ladino and one Indigenous with large gaps in both social and economic outcomes. These differences are aggravated by the country’s high vulnerability to climate change which affects malnutrition, health, food security, water resources and natural ecosystems.

    Accelerating growth will be crucial to achieving the country’s medium- and long-term social objectives. While pro-poor policy reforms could yield marginal improvements, a change in growth is needed.  Boosting growth will depend on continued reforms to mobilize increased private investment and revenue to fund important pro-growth investments in infrastructure and human capital.

    Public investment is essential to achieving Guatemala’s development goals, yet it remains constrained by a lack of resources. With central government’s revenue averaging 11 percent of GDP in the last three years, and estimated to be 9.7 percent in 2019, the main fiscal challenge of Guatemala is the need to raise additional revenues to finance key public investment projects.

    Other increasingly important challenges for Guatemala are strengthening governance, increasing accountability and citizen participation and improving levels of public security. High levels of crime and violence represent staggering human and economic costs for the country.

    Last Updated: Oct 10, 2019

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

    The 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 US$300 million from the International Bank for Reconstruction and Development (IBRD) and includes one active US$100 million project to improve health and nutrition and another project (US$200 million, pending Congressional approval) to increase the country’s resilience to natural hazards.

    Last Updated: Oct 10, 2019

  • Promoting competitiveness:

    World Bank support through the Competitiveness Project was instrumental in 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 Program improved the competitiveness of rural value chains and strengthened the institutional capacity of public entities through the adoption of a land management model. Results of this project include support for more than 200 partnerships with a high participation from indigenous people; an increase of US$16.4 million in these associations’ total sales; rehabilitation and construction of bridges to benefit 160,000 people, and support for the development of 324 municipal development plans.

    The Second Land Administration Project helped improve land tenure security for close to one million people (51 percent of which are women) and resolve land conflicts. More than 1,600 indigenous families received titles and four communities benefited from communal land certification, a historic precedent set by the Project. The cadastral information generated is now being used by 22 municipalities for multiple purposes, including territorial planning activities.

    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 Comprehensive Community Care program for 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 Dry Corridor, the World Bank helped the population cope with climate change through ecologically-sensitive, lower-cost production systems, which increased productivity levels and contributed to food security. Project beneficiaries included 1,600 families living in the departments of Baja Verapaz, El Progreso and Jalapa.

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

    Last Updated: Oct 10, 2019

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LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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Additional Resources

Country Office Contacts

GUATEMALA +502 2329-8000
13 Calle 3-40, Zona 10, Edificio Atlantis, Piso 14, Guatemala
cleonjuarez@worldbank.org
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433
amaso@worldbank.org