Guatemala/Economy

Guatemala's GDP for 2000 was estimated at $19.0 billion, with real growth slowing to approximately 3.3%. After the signing of the final peace accord in December 1996, Guatemala was well-positioned for rapid economic growth over the next several years.

Guatemala's economy is dominated by the private sector, which generates about 85% of GDP. Agriculture contributes 23% of GDP and accounts for 75% of exports. Most manufacturing is light assembly and food processing, geared to the domestic, U.S., and Central American markets. Over the past several years, tourism and exports of textiles, apparel, and nontraditional agricultural products such as winter vegetables, fruit, and cut flowers have boomed, while more traditional exports such as sugar, bananas, and coffee continue to represent a large share of the export market.

The United States is the country's largest trading partner, providing 41% of Guatemala's imports and receiving 34% of its exports. The government sector is small and shrinking, with its business activities limited to public utilities--some of which have been privatized--ports and airports and several development-oriented financial institutions. Guatemala was certified to receive export trade benefits under the United States' Caribbean Basic Trade and Partnership Act (CBTPA) in October 2000, and enjoys access to U.S. Generalized System of Preferences (GSP) benefits. Due to concerns over serious worker rights protection issues, however, Guatemala's benefits under both the CBTPA and GSP are currently under review.

Current economic priorities include:

• Liberalizing the trade regime;
• Financial services sector reform;
• Overhauling Guatemala's public finances;
• Simplifying the tax structure, enhancing tax compliance, and broadening the tax base.
• Improving the investment climate through procedural and regulatory simplification and adopting a goal of concluding treaties to protect investment and intellectual property rights.

Import tariffs have been lowered in conjunction with Guatemala's Central American neighbors so that most fall between 0% and 15%, with further reductions planned. Responding to Guatemala's changed political and economic policy environment, the international community has mobilized substantial resources to support the country's economic and social development objectives. The United States, along with other donor countries--especially France, Italy, Spain, Germany, Japan, and the international financial institutions--have increased development project financing. Donors' response to the need for international financial support funds for implementation of the Peace Accords is, however, contingent upon Guatemalan Government reforms and counterpart financing.

Problems hindering economic growth include high crime rates, illiteracy and low levels of education, and an inadequate and underdeveloped capital market. They also include lack of infrastructure, particularly in the transportation, telecommunications, and electricity sectors, although the state telephone company and electricity distribution were privatized in 1998. The distribution of income and wealth remains highly skewed. The wealthiest 10% of the population receives almost one-half of all income; the top 20% receives two-thirds of all income. As a result, approximately 80% of the population lives in poverty, and two-thirds of that number live in extreme poverty. Guatemala's social indicators, such as infant mortality and illiteracy, are among the worst in the hemisphere.

GDP: purchasing power parity - $47.9 billion (1999 est.)

GDP - real growth rate: 3.5% (1999 est.)

GDP - per capita: purchasing power parity - $3,900 (1999 est.)

GDP - composition by sector:
agriculture: 23%
industry: 20%
services: 57% (1999 est.)

Population below poverty line: 75%

Household income or consumption by percentage share:
lowest 10%: 0.6%
highest 10%: 46.6% (1989)

Inflation rate (consumer prices): 6.8% (1999 est.)

Labor force: 3.32 million (1997 est.)

Labor force - by occupation: agriculture 50%, industry 15%, services 35% (1999 est.)

Unemployment rate: 7.5% (1999 est.)

Budget:
revenues: $NA
expenditures: $NA, including capital expenditures of $NA

Industries: sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber, tourism

Industrial production growth rate: NA%

Electricity - production: 3.085 billion kWh (1998)

Electricity - production by source:
fossil fuel: 26.42%
hydro: 66.61%
nuclear: 0%
other: 6.97% (1998)

Electricity - consumption: 2.914 billion kWh (1998)

Electricity - exports: 6 million kWh (1998)

Electricity - imports: 51 million kWh (1998)

Agriculture - products: sugarcane, corn, bananas, coffee, beans, cardamom; cattle, sheep, pigs, chickens

Exports: $2.4 billion (f.o.b., 1999)

Exports - commodities: coffee, sugar, bananas, fruits and vegetables, meat, apparel, petroleum, electricity

Exports - partners: US 48%, El Salvador 10%, Honduras 6%, Germany 5%, Costa Rica 4% (1997)

Imports: $4.5 billion (c.i.f., 1999)

Imports - commodities: fuels, machinery and transport equipment, construction materials, grain, fertilizers, electricity

Imports - partners: US 46%, Mexico 13%, El Salvador 5%, Venezuela 5%, Japan 4% (1997)

Debt - external: $4.4 billion (1998 est.)

Economic aid - recipient: $212 million (1995)

Currency: 1 quetzal (Q) = 100 centavos

Exchange rates: quetzales (Q) per US$1 - 7.8829 (January 2000), 7.3856 (1999), 6.3947 (1998), 6.0653 (1997), 6.0495 (1996), 5.8103 (1995)

Fiscal year: calendar year