Name: Republic of Guatemala Population: 14.39 million (2010) Capital: Guatemala City Other major cities: Quetzaltenango, Escuintla, Antigua Guatemala Area: 108,889 sq km Currency: Quetzal GNI per capita: US$2,740 (2010) Main exports: Textiles, coffee, sugar, bananas, oil, vegetables Language: Spanish, indigenous languages Religion: Roman Catholic, Protestant, Mayan traditions Life expectancy: 67 years (men), 74 years (women) Country Data Profile
A multi-cultural country, Guatemala has made significant progress in achieving macroeconomic and democratic stability after a 36-year civil war.
The signing of the 1996 Peace Accords ushered in a period of stronger public institutions and improvements in health and education. It also boosted its economic standing on the heels of several trade agreements -notably DR-CAFTA- and expanded access to foreign markets.
Still, inequality and poverty -especially in rural and indigenous areas- are among the highest in the region. Stark disparities are embedded in access to health, basic education, social services and opportunities.
President Otto Perez Molina took office in 2012, pledging a tough stance on crime and a commitment to strengthen the Government’s social programs. In order to increase revenues, a proposal for fiscal reform presented by President Perez was approved by Congress in February. As a complement to this important achievement, the Executive Branch sent a transparency legal package for discussion in Legislative commissions.
Guatemala has maintained a relatively stable economic growth. A prudent macroeconomic management enabled an annual average growth of 4.2 percent between 2004 and 2007. However, the global financial crisis declined that growth to approximately 0.6 percent in 2009, the worst performance in two decades.
While surges in demand for exports and a moderate counter-cyclical fiscal stimulus helped cushion the impact of the crisis, a series of natural disasters hit Guatemala in 2010 causing an estimated US$1.5 billion in damages and losses (4.1 percent of the nation’s GDP). The following year, an additional estimated US$333 in damages and losses were suffered after a tropical depression.
Despite its challenges, Guatemala has huge potential for accelerating economic growth through trade, regional integration and tourism. The economic recovery after the 2008/2009 crisis has been moderate, with GDP growth reaching an estimated 2.6 percent in 2010 and 2.8 in 2011.
Challenges
The World Bank study Poverty Assessment in Guatemala showed the country was able to reduce poverty from 56 percent to 51 percent between 2000 and 2006. However, poverty in Guatemala rose again to 53.7 percent in 2011 according to official estimates.
The country's social indicators often fall below those of countries with lower per capita incomes. The Human Development Index (2011) ranks Guatemala 131 among 187 ranked countries and in Latin America is only ahead of Haiti.
The main challenges for the government include fostering inclusive growth, addressing social inequalities and ensuring revenues to finance public spending on education, health and infrastructure, among others.
An increasingly important challenge for Guatemala is improving the levels of citizen security. The World Bank report Crime and Violence in Central America: A Development Challenge estimates that crime and violence represent staggering economic costs for the country, equivalent to 7.7 percent of its GDP.
Guatemala has taken steps to improve transparency of public institutions at both the national and municipal levels. The efforts to fight corruption, improve the regulatory environment and modernize the judicial system need to continue in order to build public confidence and improve the business climate.
The current World Bank portfolio in Guatemala consists of seven projects amounting to US$400 million, with a focus on promoting social development, governance and transparency.
Based on consultations with representatives from the private sector and civil society and in a coordinated effort with the government the World Bank prepared the Country Partnership Strategy (FY09-FY12).
Bank assistance focuses on three development priorities:
Enhancing Fundamentals (maintaining macroeconomic stability, expanding fiscal space for priority spending, and improving governance and transparency).
Promoting Sustainable Growth and Productivity (improving the investment climate, rural development and productivity, sustainable energy, and disaster risk management).
Expanding Opportunities (enhancing opportunities for vulnerable groups through improving access to, and use of, social programs).
In response to the food, fuel and global economic crises in 2008 and 2009 and to provide counter-cyclical financing, the World Bank adjusted its lending program, shifting resources from investment operations to development policy lending to support a number of key reforms in economic management and governance and protect social expenditures.
Moreover, several projects were restructured to enhance program alignment with government priorities and accelerate implementation. In addition, Governance and Anti-Corruption activities have been reinforced to assist the Government’s efforts to increase transparency of public expenditures.
Active projects include:
Enhancing Micro, Small and Medium Enterprise Productivity This project will improve the productivity of micro, small and medium enterprises (MSMEs) in Guatemala's tourist and agribusiness sectors. This operation aims to bolster MSME growth by increasing added value, product quality and integration into national and international markets.
Maternal-Infant Health and Nutrition Project This project aims to improve maternal and infant health by encouraging the use of health and nutrition services and supporting the development of a Maternal and Infant Health Referral Network. One of its objectives is to reduce chronic malnutrition among children younger than 2 years of age in rural areas, by expanding coverage of community-based growth promotion and basic health services.
Education Quality and Secondary Education The objective of this project is to improve access to a quality lower secondary education for low income students, especially indigenous communities, through improved primary education completion rates for overage students, strengthened flexible lower secondary education modalities and better school management.
Competitiveness Project This project was instrumental for strengthening the National Competitiveness Program (PRONACOM) and the operational start up of the “INVEST in Guatemala” agency, which succeeded in attracting and facilitating US$944 million in new foreign direct investments and the creation of over 24,000 new jobs between 2005 and 2008.
Ensuring All Children Can Go to School in Guatemala Despite the Government’s efforts, many children, especially girls, still do not have access to a good primary education. The World Bank has supported efforts to increase the number of children in primary schools and improve the quality of education in rural areas, largely through the PRONADE program of community-led schools.
A multi-cultural country, Guatemala has made significant progress in achieving macroeconomic and democratic stability after a 36-year civil war.
Guatemala has maintained a relatively stable economic growth. A prudent macroeconomic management enabled an annual average growth of 4.2 percent between 2004 and 2007. However, the global financial crisis declined that growth to approximately 0.6 percent in 2009, the worst performance in two decades.
The main challenges for the government include fostering inclusive growth, addressing social inequalities and ensuring revenues to finance public spending on education, health and infrastructure, among others.
The current World Bank portfolio in Guatemala consists of seven projects amounting to US$400 million, with a focus on promoting social development, governance and transparency.
Active projects include:
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