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.