Economy of Guatemala

Guatemala is the most populous Central American country and has a GDP per capita roughly one-third of Brazil's. Coffee, sugar, and bananas are the main products.[citation needed] The 1996 peace accords ended 36 years of civil war and removed a major obstacle to foreign investment. Since then Guatemala has pursued important reforms and macroeconomic stabilization.[citation needed] On 1 July 2006, the Central American Free Trade Agreement (CAFTA) entered into force between the US and Guatemala and has since spurred increased investment in the export sector.[citation needed] 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.[citation needed] Guatemala's economy is dominated by the private sector, which generates about 85% of GDP.[citation needed] Most of it’s 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.[citation needed]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 36% of Guatemala's imports and receiving 40% of its exports. 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.[citation needed] Guatemala is the fourth most unequal country in Latin America and the ninth in the world.


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