Guatemala Overview: Development news, research, data
Latin America and Caribbean(LCR) Guatemala(GT)
Despite the global financial crisis and recent natural disasters, Guatemala continues to have huge potential for economic growth. But with the second lowest social indicators in the region, rising food prices pose a risk for vulnerable members of the population.
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World Bank
Guatemala is the largest economy in Central America in terms of population (estimated at 17.3 million in 2022) and economic activity (gross domestic product -GDP- of US$ 92.7 billion in 2022). The country has experienced stable growth (3.5 percent on average in 2010-19), supported by prudent fiscal and monetary management and an open economy, and had one of the smallest economic declines (-1.8 percent) in the Latin America and Caribbean (LAC) region in 2020 during the COVID-19 pandemic.

The country has returned to above-LAC average economic growth. Guatemala’s GDP grew 4.1 percent in 2022 and 3.5 percent in 2023 and is expected to grow 3 percent in 2024.

However, Guatemala’s solid economic growth has not translated into robust poverty reduction: the country’s poverty and inequality rates are among the highest in LAC, with a large and underserved population, mostly rural and indigenous. Poverty is estimated at 55.1 percent of the population in 2023 and the size of Guatemala’s informal economy is estimated at 49 percent of GDP, with 71.1 percent of the occupied population employed in the informal sector.

A small and ineffective state (with historically low tax revenue and low spending), persistent gaps in access to basic services, limited employment and productive opportunities, and frequent disasters are some of the key factors that have contributed to poverty in Guatemala. All these factors explain the high rates of emigration and the significant dependence of the economy and its households on remittances. In 2022, migrants sent back remittances equivalent to 19 percent of the country's GDP.

Guatemala’s Human Capital Index score of 0.46 (2020) remains far below the LAC average. Human capital indicators are low among Indigenous peoples and Afro descendants. Guatemala’s child malnutrition rate (at 47 percent) is among the ten highest in the world. In several of the poorest municipalities, the share of households with stunted children under five is often close to 90 percent.

Extreme weather events and other disasters have also reversed hard-won gains in human capital, destroyed infrastructure, reduced agricultural output, intensified food insecurity, spread diseases, and disrupted essential services. Recent estimates suggests that the Eta and Iota hurricanes in 2020 caused infrastructure-related losses of close to 0.56 percent of GDP, as well as agriculture-related losses of close to 0.20 percent of GDP.

Guatemala nonetheless has enormous potential to generate growth and prosperity for its entire population. It possesses a civilization spanning culture, is rich in natural resources, and in terms of biodiversity, is one of the world’s megadiverse countries. Its proximity to the United States provides significant tourism and nearshoring opportunities.

President Bernardo Arévalo took office in January 2024 after running on a platform of strong social and economic investment and an anti-corruption stance. The Arévalo administration is committed to increasing the accountability and effectiveness of the public sector, creating better conditions for trade and investment, and advancing reforms to address significant gaps in human development, infrastructure and economic inclusion.

Last Updated: Apr 03, 2024

The World Bank’s Country Partnership Framework (CPF) for 2024-2027 is supporting Guatemala's efforts to enhance human capital, build resilience to disasters and climate change, and improve job opportunities, focusing on strengthening institutional capacity and promoting inclusion.

The CPF aims to make measurable contributions through investments and technical support to improve three key development opportunities for Guatemala:

Increased human capital: improving child nutrition and development, expanding coverage of social safety nets, and increasing access to improved infrastructure and basic services such as health, social protection, and water and sanitation services.

Increased resilience to natural disasters and climate change: strengthening the capacity to manage disaster risk, natural capital and resilience to climate shocks through improved disaster preparedness, forest management and infrastructure.

Improved job opportunities: increasing employment through a more efficient public spending, leading to improved public investment, jobs, and economic opportunities in rural and urban areas.

Two cross-cutting themes in CPF focus on (i) institutional capacity: improving data availability, integrity and transparency; and (ii) inclusion: addressing exclusionary barriers, particularly affecting women and indigenous groups, and promoting their economic empowerment.

The CPF proposes potential investments of up to US$ 2.5 billion over four years. The World Bank’s support to Guatemala encompasses a wide range of financing instruments to help the country address its development challenges, working in coordination with development partners. In addition, technical assistance and advisory services, as well as analytical work, is provided to help build institutional capacity and improve service delivery by drawing on global expertise.

The World Bank's active portfolio in Guatemala amounts to US$ 405 million and includes three projects. One of those operations -totaling US$ 250 million- is pending approval by the National Congress. Meanwhile the US$ 100 million Crecer Sano child health and nutrition project, effective since 2019, and an Emission Reductions Payment Agreement (ERPA), funded by a US$ 52.5 million grant to address key drivers of deforestation and forest degradation, continue implementation.

The current portfolio is complemented by technical assistance and analytical services in areas such as tax administration, sustainable industries, and decarbonization. Also, by a Dedicated Grant Mechanism project (US$ 4.5 million) to strengthen the capacity and benefits of Indigenous Peoples and local communities in their role in sustainable forest and natural resource management.

The World Bank is also working on preparing new projects focused on urban infrastructure, rural roads and strengthening Guatemala’s capacities for disaster risk management and for immediate access to financial resources in case of disasters or health emergencies.

Last Updated: Apr 03, 2024

Technical support provided by the World Bank and UNICEF to the Ministry of Social Development, for designing a comprehensive information management system and strengthening its social protection systems, allowed the Government of Guatemala to rapidly expand its cash transfers program in 2020 and create the “Bono Familia” to support families during the COVID-19 pandemic. The “Bono Familia” platform enabled beneficiary families (around 2 million) to be identified through a simplified verification process, minimizing personal contact, and the delivery of 1,000 quetzales (US$ 134) per family through “simplified bank accounts”. Money could be received in bank branches or ATMs or used to pay for goods in stores, allowing the expansion of digital payments for thousands of families who lacked access to bank accounts.

Facing one of the highest secondary school dropout rates in the Latin America and Caribbean region, Guatemala had several challenges in accurately identifying students at risk of dropping out and implementing more effectively targeted interventions. The World Bank’s technical assistance from 2018 to 2020 helped strengthen the capacity of Guatemala’s Ministry of Education to collect, manage, analyze, and use high-quality statistical information and pilot the use of an early warning system to identify at-risk students. The pilot, which was implemented in 3,000 schools and prevented approximately 850 children from dropping out, will be scaled up nationwide and will include a guide for teachers on low-cost interventions to prevent dropouts.

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, which closed in 2014, include support for more than 200 partnerships with a high participation from indigenous groups; 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 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 % in 2006 to 89 % 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. The project closed in 2016 and benefitted 1,600 families living in the departments of Baja Verapaz, El Progreso and Jalapa.

The Second Land Administration Project helped improve land tenure security for close to one million people (51 % 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, which closed in 2015. The cadastral information generated is now being used by 22 municipalities for multiple purposes, including territorial planning activities.

Last Updated: Apr 03, 2024