For a long time, agriculture was the basis of the country’s business, but in the 2000s, the service and service industries and industry became increasingly important. Clothes and coffee are the country’s largest export products.
In the 1970s and 1980s, a longer period of economic stagnation was initiated, partly because of unfavorable price developments in the world market. The industry, which has held a leading position in Central America, has stagnated. Private investment fell sharply and capital flight from the country was enormous. The largest investor in banking and communications was the military. The tourism industry was exposed to international boycotts in the early 1980s, but increased again at the end of the decade, making it one of the most important sources of income during the 1990s. When the military left power in 1986, economic crisis prevailed in the country, and the first democratic government failed to improve the economy. GDP per inhabitant fell by 20 percent during the 1980s.
When the civil war ended with a peace treaty in 1996, an economic recovery led by increased foreign investment began. Growth was stable, although the country was temporarily hit hard by the financial crisis in 2008 when many investors left Guatemala. Thanks to continued good prices for raw materials that the country produces, growth was able to rebound quickly.
Some Guatemalan companies grew large both regionally and globally by adapting to global economic trends and conditions. But at the same time, large parts of the business community are still dependent on a corrupt interaction with the political elite and government institutions.
Parallel to the country’s economic growth, social indicators have turned downwards. Guatemala is one of the few countries that showed a negative trend for some of the Millennium Development Goals, such as increasing extreme poverty and child malnutrition.
The corrupt economic model has been favorable for some selected companies and sectors, but has made the business sector largely weak in terms of competitiveness and preparedness to meet international competition. The uneven distribution of resources, poor infrastructure and low educational attainment among the majority of the population also impedes long-term sustainable growth.
Land ownership is among the most uneven in Latin America, with 2 percent of the population owning more than 70 percent of the arable land. On the large goods, the export products are grown coffee, cotton, sugar and bananas.
During the latter part of the 20th century, the growth of export agriculture was more than twice the rate of food cultivation. Domestic food production has not kept pace with population growth during the same period. Although more than half the population is employed in agriculture, Guatemalan imports food and receives grain assistance from the United States.
The small farmers grow maize and beans, which is the basic food in Guatemala. Of the country’s land plots, 90 percent are too small to support a family, and the proportion of landless farm workers’ families has grown. The export products coffee, sugar and cotton are grown mainly on the fertile Pacific coast, while bananas are grown on the Atlantic coast. Since the 1980s, Guatemala also exports vegetables, cut flowers, nuts and plants.
Guatemala has large unspoilt lands, and more than a third of the country’s area is covered with forest. The rainforest in the north (in the province of Petén) is larger than neighboring El Salvador. As a result of the demand for cedar and mahogany, this forest is seriously threatened. Guatemalan environmental interests have tried to protect the forest, but so far without much success. The rainforest is also threatened by the many poor Swede farmers. Guatemala exports raw rubber from the balata tree to chewing gum factories in the United States. There is a great demand for wood throughout the country, which accelerates deforestation.
Guatemala has oil deposits in the country’s northern and northwestern parts. The deposit area is called Tranversal Norte and is a vast and pathless jungle. The military’s attempt to exploit the oil became one of the conflict causes during the 1970s. Today, extraction and refining take place to a small extent; the country imports twice as much oil as it exports. Guatemala also contains copper, zinc, lead and antimony.
Wood is the major source of energy with over 50 percent of total energy consumption. In the countryside, but also in the cities, wood is used for cooking as well as for heating and lighting. In the highlands there is small-scale charcoal production. Large hydropower plants were built in the 1980s to replace oil-based energy production, and hydropower contributes 85 percent of Guatemala’s electricity generation. About 60 percent of electricity consumers are in the capital. Guatemala was severely affected by the oil crisis in the 1970s and has since begun to produce oil but is dependent on imports from mainly Mexico and Venezuela.
Guatemala’s industry, which expanded during the 1960s, is the most developed in Central America. The country was favored by the Central American Common Market and was therefore also affected by its collapse in the late 1970s. Decreased exports to neighboring countries were replaced by exports to the United States. However, since the late 1980s, exports to neighboring countries have increased again. The industry is hampered by the fact that the indigenous population is weak.
As in several of its neighboring countries, so-called maquiladoras have been established in Guatemala. These are assembly plants for simpler manufacture of mainly clothing, household appliances and electronic components. The factories are usually located in special economic zones. Other industries are concentrated in the metropolitan area, producing food, clothing, textiles, consumables, medicine and cement.
According to Countryaah, trade with the United States dominates and accounts for more than a third of exports and imports. In recent years, import spending has exceeded export earnings. During the 1960s and 1970s, Guatemala was favored by the Central American Common Market (CACM), which subsequently collapsed due to wars in the region. During the latter part of the 1980s, Guatemala worked to restore the CACM. In 1991, the presidents of Mexico and Central America signed a free trade agreement, which is valid from 1996.
Important export products are textiles, coffee, sugar, oil, bananas, cotton and cardamom. Important import products are oil, workshop products, building materials, telecommunications and electrical materials, fertilizers, insecticides, medicine and cereals. Guatemala’s trading partners are primarily the United States, El Salvador and Mexico.
Tourism and gastronomy
The external conditions for the tourism industry are good in Guatemala. The country offers visitors a varied and grand nature as well as opportunities to get acquainted with Native American cultures from both the time and modern times. Tourism has also been a significant source of income for the country at times, but the industry has occasionally declined due to the troubled political situation, including during parts of the 1980s. In the 2000s, tourism has increased sharply, and in 2012, the country was visited by 2 million tourists. Despite the large increase in tourism during the 2000s, there is a great concern within the tourism industry that the many violent crimes in the country should scare away tourists.
In the Quezaltenango area and east towards Guatemala City are a series of volcanoes. There is also the lake Atitlán with both tourist resorts and Indian villages, surrounded by 3,000 m high volcanoes. Another interesting lake area is Petén Itzá in the department of El Petén in the north, whose capital, Flores, located on a small island, was the last Native American city-state to be conquered by the Spaniards. It was first conquered in 1697. Northeast of the lake lies Tikal, the largest excavated ruin area (about 3,000 buildings) from the Maya era and one of Guatemala’s most important tourist destinations. Other ancient Mayan cities in El Petén are Uaxactún(north of Tikal) and Piedras Negras (at the border with Mexico), but also in other parts of the country there are ruin areas from past Native American cultures. Those who would rather get to know the colonial era and its architecture seek first and foremost the ancient capital of Antigua. Native American crafts, not least textile products, such as fabrics, can be admired in the Indian villages and purchased in one of the many markets.
The influence of the Mayan culture and especially the Spanish conquerors’ kitchen is noticeable in Guatemala. The corn and the yellow-orange dye from the fruits of the Annata tree, used to color the food, are traits that remain from the Mayan culture; the rice and pig farming are Spanish imports. Pork meat is common in Guatemala, preferably in pots with bananas. Otherwise, the diversity of fresh vegetables is a hallmark of the country’s cuisine, which shows considerable similarities to Mexican cuisine.
Carne a jocon, a beef stew with green and red tomatoes, a variety of hot spices and a rescue of masa harina (cornmeal), is something of a national dish. It is often served with arroz Guatemalteco (rice cooked with vegetables). Stuffed peppers with pacido de rabano (salad on radishes), fish pots and shrimp sauces for rice, fresh mango and papaya are other very common elements on the dining table. In the larger cities, international cuisine has come through.