Agriculture has long been Guatemala's main
industry, but today the service sector is the largest.
The manufacturing industry has also become an important
source of income, as has the increase in tourism.
Resources and income in the country are very unevenly
distributed and growth is hampered by, among other
things, widespread crime and corruption.
Other obstacles to the development of the economy are
a low level of education among the population,
inadequate infrastructure and a low tax rate.
Major imports by Guatemala, covering a full list of top products imported by the country and trade value for each product category.
The lack of security has helped keep foreign
investors at a distance, but in recent years foreign
direct investment has increased. Economic policy has
been praised by the World Bank, and growth has now been
one of the strongest in Latin America for a few years.
Guatemala is an average income country in terms of
gross domestic product (GDP) per inhabitant. Yet, more
than half of the population lives in poverty because of
the oblique distribution of resources. One problem is
that the state has failed to collect enough taxes to
provide basic community services. Taxes are among the
lowest in the world, and despite pressure from
international lending and aid agencies such as the IMF
and the World Bank, several governments have failed to
raise them. The opposition in Congress and business is
Despite repeated attempts by the government to
increase tax collection, 2017 was only 10.2 percent of
GDP, the lowest level in 20 years and the lowest in all
of Latin America, according to the World Bank. Weak
institutions also cause the tax fraud to be widespread,
the state is estimated to lose about 40 percent of VAT
revenue and 60 percent of income tax.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including GTM which represents the country of Guatemala. Check findjobdescriptions to learn more about Guatemala.
Large service sector
Agriculture has traditionally been the most important
industry. The sector still employs around a third of the
labor force, but its share of GDP and of export revenues
has decreased. For a long time, there is also a
manufacturing industry that is more extensive than in
other countries in Central America.
The largest, however, is the service sector, which
accounts for just over 60 percent of GDP and employs
close to half of the working population. The most
important in this sector is trade and financial
services. Tourism has also become an increasingly
important source of income. Furthermore, the money that
Guatemalans abroad send home is an important financial
contribution, which in 2017 amounted to about 11 percent
Guatemala's location between Colombia and the United
States makes it an important transit country for drug
trafficking. It is estimated that the illegal drug trade
accounts for up to eight percent of GDP, and parts of
the construction sector are suspected of being financed
with drug capital. Money laundering is a problem even if
the laws have been tightened.
Drought and famine
The peace agreement in 1996 aroused high hopes of
creating sustainable growth. But financial market
instability and fluctuations in world market prices of
coffee and sugar, among other things, contributed to
continued jerky growth. On average, growth was three
percent between 1980 and 2012, and that was not enough
to raise the living standards of the growing population.
The global financial crisis in 2008 hit hard on
Guatemalan exports and the flow of money from foreign
Guatemalans. Growth nearly stopped altogether, and when
drought in 2009 left hundreds of thousands of people at
risk of starvation, the government was forced to appeal
for aid in the form of food and money from abroad. In
2010, the economy turned up again and growth was 3–4 per
cent in the following year.
The previously low government debt increased over a
number of years, but since 2010 it has been around 24
percent of GDP, which is a relatively low figure
compared to other countries in the region.
FACTS - FINANCE
GDP per person
US $ 4,549 (2018)
US $ 78 460 million (2018)
3.1 percent (2018)
Agriculture's share of GDP
10.0 percent (2018)
Manufacturing industry's share of GDP
17.9 percent (2018)
The service sector's share of GDP
62.9 percent (2018)
4.2 percent (2019)
Government debt's share of GDP
24.7 percent (2018)
US $ 22,993 million (2017)
US $ 11,079 million (2018)
US $ 18,366 million (2018)
US $ 638 million (2018)
Commodity trade's share of GDP
39 percent (2018)
Main export goods
clothes, sugar, bananas, coffee, cooking oil,
Largest trading partner
USA, El Salvador, Honduras, Mexico, China
Colom wins the presidential election
In the second round of the presidential election, Álvaro Colom Caballeros,
who belongs to the Social Democratic Party wins the National Union of Hope
(UNE). He gets just over 52 percent of the vote against a former General Otto
Pérez Molina who is the right-wing Patriotic Party's (PP) candidate. In the
election to the congress, UNE receives support from 23 percent of voters, which
is sufficient for 48 of the 158 seats, while Ghana receives 37 seats and PP 30
seats. UNE thus gets far from its own majority. Former dictator Efraín Ríos
Montt is voted into Congress and thus regains prosecution immunity.
The Social Democrat wins in the first round of elections
In the first round of the presidential election, Álvaro Colom Caballeros gets
28 percent of the vote. Colom is a candidate for the Social Democratic Party
Hope National Union (UNE). Former General Otto Pérez Molina is a candidate for
the right-wing Patriotic Party (PP) and receives 23 percent, while 17 percent
supports Alejandro Giammattei who is running for the center-right party Great
National Alliance (Ghana). Peace Prize-winner Rigoberta Menchú (see Modern
History) comes in sixth place among a total of 14 presidential candidates.
Murder of politicians and police officers
Three Salvadoran politicians visiting Guatemala are murdered. Four police
officers arrested for involvement in the murder are shortly thereafter murdered
in the custody. One of them was the head of the police unit against organized
crime. The murders seem to confirm suspicions about police-organized crime and
the presence of so-called death patrols in Guatemala. As a result, Interior
Minister Carlos Vielmann resigns.