An gradually sliding conversion standard, expansion focus, and prudent financial management have all contributed to Guatemala’s financial stability. Even though it has experienced sluggish development rates of 3.5% on average over the last five years, Guatemala’s economy—the largest in Central America—has also performed well.
In any case, there has not been a significant decline in poverty and inequality as a result of this financial stability. Guatemala’s economy ranks fifth worst in Latin America and the Caribbean (LAC) based on GDP per capita (US$ 4,549 in 2018), with a high rate of inequality and need.
Guatemala also has the highest rate of persistent malnourishment in Latin America and the sixth highest rate globally. Continuous childhood hunger (and its impediment) affects 47% of all children under five, 58% of children of Indigenous descent, and 66% of children in the lowest wage quintile. Out of 113 countries, Guatemala ranked 68th in 2019 for food security, with only 40% of Guatemalan families able to afford it.
Low primary government revenues (11 percent of GDP on average as of late, with a projected 9.7% in 2019) restrict the quality and scope of vital public administrations, such as healthcare, education, and water access. They also limit the capacity for public projects. This maintains the lack of economic incentive for paying customs and duties.
The COVID-19 pandemic has disrupted billions of lives and livelihoods worldwide, undermining years of arduous progress. In a more benign scenario, the global economy would contract by 5.2% in 2020 before rebounding in 2021; in a more dire scenario involving postponed closures, the global yield might drop by almost 8% in 2020.
The epidemic has had a major impact on Guatemala’s economy, which is predicted to contract by 3% in 2020. It has also exacerbated pre-existing deficiencies and had many unfavorable social impacts.
- Businesses have been affected overall by lockdown measures, declining interest, bottlenecks in flexible chains, and drying cash as income breakdown. MSMEs, in particular, account for over 90% of private positions.
- The industries where the majority of the weak labor force is concentrated—development, administration, transportation, and business—and where female employment is also often conspicuous are those where job disasters are expected to be most noticeable.
- The earnings of temporary workers, independent contractors (about 40% of the workforce), and workers in certain industries (such as entertainment and travel) would decline.
- The two main sources of income from foreign trade, fares and settlement inflows, may be impacted by the U.S. economic slump, which might further exacerbate the pause in private utilization.
It is estimated that approximately 1,000,000 people will become destitute, increasing the country’s rate of destitution by up to six percentage points, depending on the severity and duration of the crisis as well as the rate at which money is recovered.