During his first year in government, Bernardo Arévalo has faced many challenges and obstacles in the form of political struggles, infrastructure problems or insufficient results in health and education.
But amid this panorama, it seems that the macroeconomic stability that has characterized Guatemala in the last decades has been maintained. This is something that has been recognized by international entities such as the International Monetary Fund (IMF) or risk rating agencies. The latter continue to focus on the need to achieve improvements in infrastructure or social indicators.
Therefore, we present some of the most relevant indicators for the country's macroeconomy and analyze some factors to keep in mind during 2025.
Gross Domestic Product Growth (GDP)
Guatemala closed 2024 with an economic growth of 3.7%, slightly higher than the figure achieved in 2023, and within the range forecast by the Bank of Guatemala (Banguat). For 2025, a new upturn is expected, reaching 4%, supported by the dynamism of remittances, the attraction of foreign investment and controlled inflation.
Remittances
In the case of remittances, growth has been steady in recent years, exceeding US$21.5 billion in 2024, a figure that represents 20% of the national GDP. By 2025 the dynamism is expected to continue, but we will keep an eye on the impact of the anti-immigration measures the new president of the United States, Donald Trump, takes on.
Inflation
Inflation closed 2024 at 1.70%, well below the figure recorded in recent years. This is another indicator that reinforces the image of macroeconomic stability of the country. Despite this, it is important to point out that some experts have questioned the result due to some changes in the calculation methodology of the Consumer Price Index (CPI).
Unemployment Rate
The unemployment rate in Guatemala continues to be low, but we must remember that more than 70% of the population in the informal sector. According to figures from the Guatemalan Institute of Social Security (IGSS), as of October 2024, the number of contributing members amounted to 1,676,214 for a population of 7.1 million economically active people. This represents an increase of 7.24% over the previous year.
Public Debt
Unlike other countries in the region, Guatemala's debt does not represent a major risk to the country's stability, as there is enough liquidity to meet its commitments. Institutions such as the IMF have even affirmed that the country still has room for indebtedness, if these funds are used for investment.
The only indicator where Guatemala tends to be slightly above the recommended level is the debt to tax revenue ratio, but this has been gradually stabilizing thanks to the steady improvement in tax collection.
Tax collection
In the last five years, tax collection grew by more than Q40 billion (US$5.2 billion). It is important to point out that the tax target proposed by the SAT was far exceeded every year except for 2020. This is largely due to improvements in the technology used by the SAT and an increase in tax audits.
Between 2010 and 2019, the goal had only been met twice. Since Marco Livio Diaz, current Superintendent, took office in April 2020, the goal has been met four times.
Tax Burden as a Percentage of GDP
Although it has improved in recent years, Guatemala's tax burden remains low and is far from the 15% or 20% recommended by some international organizations for developing countries such as this one. This lack of resources limits the state's capacity to invest in issues of vital importance to the population, such as infrastructure, education or health, and affects the rating agencies' evaluations.
Exchange Rate
The quetzal has been characterized by its stability over time, something that has not changed during 2024. This reality is influenced by Banguat's Participation Rule, a mechanism that is activated when the exchange rate fluctuates beyond established parameters. There, the central bank intervenes by buying or selling foreign currency.
Balance of Trade (BOT)
As has been the norm, Guatemala's trade balance continues to be negative, as imports exceed exports by a wide margin. By products and countries, what we sell most are clothing, bananas and coffee to Central America, the United States and the Eurozone. On the other hand, what we buy most are non-durable consumer goods and capital goods for industry, telecommunications and construction from the United States, the People's Republic of China and Central America.
Monetary Reserves
In 2024, Guatemala's monetary reserves increased by more than US$3 billion. This strengthens the country's position to meet its short-term obligations, if necessary.
Foreign Direct Investment (FDI)
Foreign investment figures have not yet been confirmed as of December, but analyzing what has been registered up to September and what Banguat has presented to Fitch Ratings, everything seems to indicate that there will be a slight growth with respect to the previous year.
According to data published through September, Panama (US$361 million), Mexico (US$296.3 million), the United States (US$188.8 million) and Luxembourg (US$96.5 million) have been the largest investors during 2024.
In terms of the industrial activities to which the most funds were allocated, the main destinations were financial and insurance activities (US$476.3 million), manufacturing (US$243.6 million), trade and vehicle repair (US$201.8 million), and information and communications (US$150.1 million).
Conclusions
- The country's macroeconomic stability is being maintained, with no short-term threat from debt levels or fiscal deficits.
- The country needs to increase its tax burden in order to have a recommended investment capacity, accelerate its economic growth and achieve deeper changes in indicators related to poverty and inequality.
- It will be important to keep an eye on the possible economic impacts of the policies that the United States will implement in the coming months on issues related to migration or the imposition of tariffs.
- Another challenge is to improve the quality of employment and increase the level of labor formalization to improve tax collection and improve the quality of life of all Guatemalans.
If you have any questions or would like more information, we are at your service.
