Guatemala economy: Catering to the haves.

Having gone through a civil war that lasted for over 35 years, Guatemala can be expected to have all the legacy problems of such a history.

Among the most populous of the Latin American countries, it also has a record of sorts for income disparities. It is a typical case of the rich becoming richer and the poor becoming poorer.

The private sector plays a major role in Guatemala’s economy, and contributes 90% of the GDP. The services sector dominates in the economic activity sphere, contributing 60% and above to the GDP, while industry comes second at around 26%, and agriculture at 13%.

While the services industry provides employment to only 35% of the workforce, agriculture takes care of 50% of the workforce. Among the important agricultural products are coffee, sugar, and bananas. Other produce includes corn, beans, spices, etc. Agriculture contributes to nearly 25% of the export earnings.

Among the important industries of Guatemala are sugar, textiles, chemicals, apparel, rubber, food processing, etc. The major part of the manufacturing output caters to internal demand, and also from sorrounding countries especially the United States. Guatemala has a large expatriate population that remits a substantial amount of foreign exchange.

Guatemala also benefits from its membership of the CAFTA, the Central American Free Trade Agreement. Under this program, Guatemala is able to export goods without customs tariffs and is able to attract foreign investment. Even though the country has a fairly sound macro-economic structure in place, the problem is there is no percolation of economic benefits down the line.

Over half of the population of Guatemala lives below the poverty line,and over 30% of the population is said to manage on less than USD 2.00 a day. With the global economy in recession, Guatemala has to contend with decreasing demand for its goods and services, and a fall in the inward remittances.
Guatemala needs to urgently address its outstanding economic issues, and ensure a fair level of economic development to all sections of its society.

Jamaican economy: Payback time now.

Jamaica is sitting on a debt bomb, literally speaking. And now it appears to be time for a payback.

The current global economic crisis has exposed several myths about the strengths and weaknesses of the economies and economic systems around the world. Among the hardest hit are the ones considered to be the toughest and infalliable. One has to only look at the state of the American Banking and Financial Services industry to understand the point.

The Jamaican economy is sustained mainly by tourist revenues and inward remittances. The services sector provides employment to nearly 65% of the workforce, contributing over 60% to the GDP. And industry, dominated by bauxite and alumina related activities contributes about 35% to the GDP, while providing employment to 20% of the workforce. Among the other industries are cement, paper, chemicals, etc.

The country exports bauxite, alumina, coffee, chemicals, apparel, sugar, etc. And imports fuels, raw materials, machinery, capital goods, foodstuffs, consumer goods, etc. By far U.S.A. is Jamica’s major trading partner, both for exports and imports.

The major problem faced by Jamaica now is the huge debt burden that is said to be about 130% of the GDP. Other problems include the slower growth on account of the general global slowdown that has hit Jamaica’s tourist industry. This in turn, has led to increasing unemployment and underemployment. This vicious circle has inevitably resulted in burgeoning crime that is actually posing a hurdle to the economic progress and development of the country.

The Jamaican authorities are considering various options to deal with the situation. But in view of the tight economic position in most parts of the world, Jamaica’s options for a bailout appear to be limited. One of the options is a bailout package from the World Bank and the IMF.

As a matter of fact, Jamaica is paying for its past excesses now.

Costa Rican economy: Basically sound.

The Central American nation of Costa Rica is one of the region’s more stable economies, that has benefitted from its strategic location, and moderate climate.

Political stability, sound macro economic policies, a highly educated populace are among the features of this country that have attracted a lot of foreign investment from top MNCs, especially in the electronics sector. In fact, Costa Rica is one of the world’s largest producers and exporters of electronics products. Other industries of note are food processing, textiles, clothing, medical equipment, fertilizers, plastics, etc. Costa Rica is also a major center of ecotourism that attracts hundreds of thousands of visitors from around the world, especially the United States.

Among the agricultural produce from this country are bananas, pineapples, coffee, sugar, rice, corn, beans, timber, etc. The dairy, poultry, and the meat industry are also important economically. The country exports coffee, bananas, pineapples, sugar, electronics goods and components, medical equipment, etc., and imports raw materials, foodstuffs, consumer goods, capital equipment, petroleum products, etc. Costa Rica’s major trading partners include the United States, Mexico, Venezuela, Japan, etc.

The GDP growth rate of the country is a relatively high 5% and unemployment around 4.5%. Of particular importance and interest is the fact that for the last twenty years and more, Costa Rica has maintained its poverty level at around 20%. The major part of the GDP at aound 60% is contributed by the services industry, while manufacturing contributes around 30% and agriculture about 7.5%. While 64% of the workforce is engaged in the services industry, 22% in manufacturing, and 145 in agriculture.

The country needs to pursue major fiscal reforms and invest more in infrastructure, and taking proper advantage of the U.S. CAFTA can help the economy make rapid strides, and bring about more prosperity to the country and its people.