Both growth and hardship set to endure in Guatemala

Significance

The country’s poverty rate stood at 52.4% in 2020 according to the World Bank, a 5-percentage-point increase on the level prior to the COVID-19 pandemic. The World Bank nevertheless estimates that this deterioration would have been substantially worse were it not for the government’s policy response.

Impacts

• Food insecurity in Guatemala, the rates of which are among the highest in Central America, will weigh on GDP growth potential.
• Social unrest amid a sharp rise in the cost of living and democratic backsliding will increase ahead of the general election in June.
• Weak infrastructure development relative to competitors will constrain Guatemala’s exports expansion.
• Increasing rural poverty and agricultural stress linked to climate change will further spur migration.