The economy of Guatemala is considered a developing economy, highly dependent on agriculture, particularly on traditional crops such as coffee, sugar, and bananas. The Guatemalan economy is the largest in Central America. It grew 3.3 percent on average from 2015 to 2018. However, Guatemala remains one of the poorest countries in Latin America and the Caribbean, having highly unequal incomes and chronically malnourished children. The country is beset by political insecurity, and lacks skilled workers and infrastructure. It depends on remittances for nearly one-tenth of the GDP.

The 1996 peace accords ended the 36-years-long Guatemalan Civil War, and removed a major obstacle to foreign investment. Since then Guatemala has pursued important reforms and macroeconomic stabilization. On 1 July 2006, the Central American Free Trade Agreement (CAFTA) entered into force between the United States and Guatemala. It has since spurred increased investment in the export sector.U.S. Department of Agriculture The distribution of income remains highly unequal, with 12% of the population living below the international poverty line. Guatemala's large expatriate community in the United States, has made it the top remittance recipient in Central America. These inflows are a primary source of foreign income, equivalent to nearly two-thirds of exports.

Guatemala's gross domestic product for 1990 was estimated at $19.1 billion, with real growth slowing to approximately 3.3%. Ten years later, in 2000, it rose from 1 to 4% and by 2010 it had fallen back to 3%, according to the World Bank. The final peace accord in December 1996 left Guatemala well-positioned for rapid economic growth.

Guatemala's economy is dominated by the private sector, which generates about 85% of GDP. Most of its manufacturing is light assembly and food processing, geared to the domestic, U.S., and Central American markets. In 1990 the labor force participation rate for women was 42%, later increasing by 1% in 2000 to 43% and 51% in 2010. For men, the labor force participation rate in 1990 was about 89%, decreased to 88% in 2000, and increased up to 90% in 2010 (World Bank). Self-employment for men is about 50%, while the rate for women is about 32% (Pagàn 1).

Over the past several years, tourism and exports of textiles, apparel, and nontraditional agricultural products such as winter vegetables, fruit, and cut flowers have boomed, while more traditional exports such as sugar, bananas, and coffee continue to represent a large share of the export market.Over the past twenty years the percentage of exports of goods and services has fluctuated. In 1990 it was 21% and in 2000, 20%. It increased again in 2010 to 26%. On the other hand, its level of imports of goods and services has continually increased. In 1990 its imports of goods and services was about 25%. In 2000 it increased by 4% up to 29%, and in 2010 it increased up to 36%. Migration is another important avenue in Guatemala. According to Cecilia Menjivar, remittances are "central to the economy." In 2004 remittances to Guatemala from men's migration to the U.S. accounted for approximately 97% (Menjivar 2)......

The United States is the country's largest trading partner, providing 30% of Guatemala's imports and receiving 33% of its exports.The World Factbook Retrieved 2 June 2011 The government sector is small and shrinking, with its business activities limited to public utilities—some of which have been privatized—ports and airports and several development-oriented financial institutions. Guatemala was certified to receive export trade benefits under the United States' Caribbean Basin Trade and Partnership Act (CBTPA) in October 2000, and enjoys access to U.S. Generalized System of Preferences (GSP) benefits. Due to concerns over serious worker rights protection issues, however, Guatemala's benefits under both the CBTPA and GSP are currently under review.

The country is predominantly poor, with 49 percent of the population living in rural areas. Guatemala is characterized by a markedly unequal distribution of wealth, assets, and opportunities: between 2000 and 2014, rural poverty increased from 74.5 to 76.1 percent, while extreme rural poverty increased from 23.8 to 35.3 percent. Young people and indigenous communities are the most vulnerable. Among indigenous people, who comprise almost 40 percent of the total population, the poverty rate is approximately 80 percent.

The Inequality-adjusted HDI (IHDI) index for Guatemala is 0.481 (Data from 2019), below the average for Latin America (0.596) and distant from the countries with very high human development (0.800).

Economic history

Historically, the Guatemala economy was heavily dependent on agriculture. Following independence, the late 19th-century governments focused on infrastructure and export-led growth, heavily promoting coffee production. This resulted in large-scale land privatization and the dispossession of communal indigenous land. In 1930, coffee was 77% of exports and bananas were 13%.

In the early 1900s, the United Fruit Company (UFCO) gained immense economic and political control. The country became the archetype of a "Banana republic," whereby foreign multinational corporations controlled vast lands, railroads and the bulk of agricultural exports. The presidencies of Juan José Arévalo and Jacobo Árbenz sought to modernize the economy by implementing land redistribution. Árbenz's Decree 900 redistributed uncultivated UFCO lands, challenging foreign corporate interests and resulting in a coup in 1954 that abruptly ended the reforms.

The Guatemalan Civil War severely crippled infrastructure, damaged investor confidence and stifled economic growth. The economy relied entirely on a narrow range of traditional exports (coffee, sugar, bananas), making the country highly vulnerable to global commodity price shocks. Following the Guatemalan Peace Process (1994–1996), Guatemala sought to stabilize its economy by joining the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR) in 2006, boosting its export and manufacturing sectors.

In 2019, Honduras signed the Central America–United Kingdom Association Agreement with the United Kingdom.

Economic sectors Agriculture

Guatemala is the world leader in cardamom production and export. As of 2013, demand for biofuels has resulted in diversion of land from subsistence agriculture to sugar cane and African Palm plantations. Much of the land is owned by large landlords. Due to legal requirements for production of biofuels in the United States the price of maize, a Guatemalan staple, has risen sharply. Agriculture accounts for 60% of Guatemalan exports and employs more than 50% of the labor force.

In 2018, Guatemala produced 35.5 million tons of sugarcane (it's one of the 10 largest producers in the world) and 4 million tons of banana (it's one of the 15 largest world producers). In addition, in the same year it produced 2.3 million tons of palm oil, 245 thousand tons of coffee, 1.9 million tons of maize, 623 thousand tons of melon, 312 thousand tons of pineapple, 564 thousand tons of potato, 349 thousand tons of rubber, 331 thousand tons of tomato, 253 thousand tons of beans, 124 thousand tons of avocado, 124 thousand tons of lemon, 177 thousand tons of orange, 120 thousand tons of cauliflower and broccoli, 93 thousand tons of papaya, 107 thousand tons of watermelon, 98 thousand tons of carrot, 75 thousand tons of cabbage, 84 thousand tons of lettuce and chicory, 38 thousand tons of cardamom in addition to smaller productions of other agricultural products.Guatemala production in 2018, by FAO

Scale

The agricultural sector of Guatemala's economy consists of two types of producers: numerous small-scale peasant-owned farms in the highlands, and fewer medium- to large-scale operations in the more fertile lowlands. The smaller farms produce staples for Guatemalan consumption, such as beans and maize, as well as fruits and vegetables for export. Larger farms produce export and plantation products like bananas, sugar cane, coffee, and rubber and palm oil. While 88% of agricultural land in Guatemala is in large-scale farms, 92% of all farms in Guatemala are small. Large farms produce 1/3 more per hectare than small farms, but employ fewer people overall.

Non-traditional agricultural exports

The shift to the production of non-traditional agricultural exports (NTAE) is a strategy used by developing countries like Guatemala to grow the agricultural sector and decreasing inequality by including the rural poor in the benefits of globalization. The most important NTAE crops in Guatemala include fruit like mangos, melons, and berries vegetables like cauliflower, cabbage, broccoli, and snow peas organic crops such as coffee. The value of non-traditional agricultural export crops has increased from $146 million US in 1992 to $262 million in 2001. IN 1998, NTAE accounted for 8.7 percent of the total exports. NTAE production largely comes from small-scale farmers. While the farmers who are involved in this market are not failing, this market limits their capital accumulation to slow growth, and therefore they are not able to profit highly off of this market.

Gender The agricultural sector of Guatemala is differentiated by gender, and this differential can be seen in several different areas within the sector. More men than women inherit or buy land individually, although many houses choose to rent land instead of buying it. Additionally, there is a gender gap in the division of agricultural labor. Traditionally, men dominated subsistence production and agricultural production for domestic markets, while women had roles in small animal production, craft production, and the selling of products in regional rather than national markets. With the shift toward NTAE, there has also been an increase in field labor for women. Additionally, women have been included in land-use decision processes in NTAE production. Sarah Hamilton, Linda Asturias de Barrios, and Brenda Tevalán have stated that despite a traditional patriarchal structure in Guatemala, NTAE production is associated with increased independence and equality between men and women.

Climate change

Mining

Banking

Education

Healthcare

Retail

Tourism

Infrastructure Telecommunications

Transport

Electricity

In Guatemala lack of access to electricity is concentrated in rural areas, although informal settlements around urban peripheries also tend to lack metered service. Guatemala's post-civil war efforts to improve electrical access in the countryside have proceeded under the auspices of the Rural Electrification Plan (Spanish: PER), a public-private partnership between the government's Ministry of Education and Mines (Mineduc) and private power companies. Over the period 2000 to 2011, the PER improved rates of electrical grid connectivity among non-indigenous (62 to 82 percent) and indigenous (48 to 70 percent) households in Guatemala. Continuity of the electrical grid is robust, with both groups reporting only about one hour per day of unavailability. Even when rural users are connected to the grid and pay subsidized rates, they often have difficulty affording electrical appliances, which translates into low power consumption (less than five percent of average US residential usage). This low power usage by rural customers is often not profitable for power companies, disincentivizing further expansion of the grid. As of 2014, one third of Guatemala's poorest rural residents still lacked electricity. By contrast, only around 8% of high-income rural residents lacked service, demonstrating that affordability plays a role in the accessibility of electrical grids.