Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Guatemala GDP grew by 3.4% in 2022, mainly driven by net exports and remittances from the U.S., which were powered both by the country's economic growth and falling unemployment among the Guatemalan population in the United States. Remittances represent around 30% of household income, and their boost should continue to support household consumption, which accounts for 85% of GDP. Furthermre, according to the IMF, GDP growth rates are expected to remain somewhat stable in the next couple of years, with an estimated growth of 3.2% in 2023 and 3.8% in 2024. Guatemala's economy receives strong financial support from the U.S. and multilateral lenders; is bolstered by free trade agreements with the U.S. and the E.U.; enjoys a privileged proximity to Mexico and the U.S.; and is recognised as a country with high potential in multiple sectors (tourism, agriculture, mining, hydroelectric and geothermal energy).

Guatemala's public deficit closed at -2.5% of GDP in 2022, and is projected to stay stable in 2023 (-2.4%) and 2024 (-2.2%). Public debt reached 30.1% of GDP in 2022 and should also remain relatively unchanged in 2023 (30%) and 2024 (29.7%). Inflation increased to 6.4% in 2022 and should decrease to 5.6% in 2023 and 4.3% in 2024. The return of inflation rates to the middle of the government's target window should continue to support consumption in 2023, allowing the central bank to maintain its expansionary policy and facilitating the growth of credit to the private sector, in keeping with the current administration's pro-business agenda. Nevertheless, Guatemala's challenges are numerous: social and political instability, poor infrastructure, corruption, vulnerability to external factors (natural disasters and commodity prices), reliance on low value-added industries and remittances, low fiscal revenues, and a range of social issues that include rural poverty, inequalities, underemployment, informality, and ethnic divisions. The absence of a redistributive fiscal policy also hinders attempts to reduce inequality. Although the pandemic has significantly impacted the Guatemalan economy, the country has been recovering, with the government implementing measures to counteract the economic crisis resulting from it.

The unemployment rate in Guatemala reached an estimated 4% in 2022, nearly double the rate of 2019, mainly due to the impacts of the pandemic - particularly in the construction sector, services, and transport. In addition, the country's informal sector grew 60% according to Guatemala's Labor and Social Security Minister. Furthermore, more than half of the population live below the poverty line. The country also has one of the highest rates of malnutrition in the world, one quarter of its adults are illiterate, there is a high level of income inequality, and there is a high rate of organised crime and drug trafficking related violence.

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