Located in the Central America, Guatemala’s abundant and unique ecosystem makes it a biodiversity hotspot. The country’s location between the Pacific Ocean and the Caribbean Sea make it highly prone to hurricanes, while the location of its highlands between the Caribbean and the North American tectonic plates leads to earthquakes. Natural disasters are quite common in this region. This, along with several social problems, put Guatemala amongst the top ten poor countries in Latin America. The distribution of income is highly uneven and malnutrition is a major problem in Guatemala. Remittances from the US, from Guatemalan who fled the nation during the civil war, are the largest source of foreign income. Tourism and exports are the other major contributors to the Guatemalan economy.
Guatemala Economy: GDP and Problems
Guatemala’s economic growth turned negative in 2009 due to a contraction in export demand from the United States and other Central American nations. The global financial crisis of 2007-09 also led to a slowdown in the foreign investments in Guatemala. The country’s real GDP growth rate has declined from 6.3% in 2007 to 4% in 2008 and -0.5% in 2009. Over 60% of the country’s GDP is contributed by the service sector, while the agriculture and industry sectors contribute 13.5% and 25.1%, respectively.
Although Guatemala has rich agricultural resources and a wide climate range that allows the country to have a diversity of crops, the inequitable distribution of land and inadequate financial support act as major constraints. Traditional crops like coffee, sugar and banana are the most popular amongst the farmers but several of them have switched to non traditional commodities like fruits, vegetables, flowers and ornamental plants. Limited accessibility to Guatemala’s large forest base makes it difficult to exploit forest products.
Manufacturing growth has slowed down in the last couple of decades since Guatemala lost its markets to Asian manufacturers. The country’s primary industrial activities include food processing and beverage production, processing of sugar, tobacco, textile, cement, tire, construction materials and pharmaceutical manufacturing.
Guatemala Economy: Key Statistics
Here are some key statistics relating to Guatemala’s economic position
GDP (real growth rate): -0.5% (2009 estimates)
Unemployment rate: 3.2% (2005 estimates)
Consumer Price inflation : 2.3% (2009 estimates)
Industrial Production growth rate: -1.4% (2009 estimates)
Public Debt: 32.7% of GDP (2009 estimates)