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Geography, agriculture and economy

The Republic of Guatemala lies in the northern part of Central America, bordering Mexico and Belize to the north and El Salvador and Honduras to the south. It covers a total land area of 108,889 km2. The country's geography and climate is very diverse, ranging from cool highlands, tropical semi-dry savannah, fertile lowland coasts and tropical jungle in the northern lowlands. Two thirds of the country is mountainous and volcanic. Guatemala is also known for its rich ethnic and cultural diversity. Indigenous peoples make up about half the population. Most are Mayans, the descendants of the great civilization that flourished in Mexico and Central America during the first millennium AD. The indigenous population includes some 23 ethno-linguistic groups. The country's total population of 13.6 million is growing at an average yearly rate of 2.5 per cent.

In 1996, Guatemala emerged from a 36-year civil war fought between government and rebel forces. The signing of the peace accord in December of that year signalled a new era of political and social stability and an opportunity to focus on developing the country's economy and addressing poverty.

Like other countries in the Caribbean, Guatemala is vulnerable to hurricanes and other tropical storms that pass through the region. In 1999, Hurricane Mitch caused an estimated US$250 million in damage, generating floods, landslides and precipitating a two-year decline in production of major export crops such as coffee and bananas. In 2005, Hurricane Stan caused substantial casualties and landslides. Many farmers lost crops and land, and people in the affected area faced the risk of severe famine.

Agriculture
Agriculture is still a major contributor to Guatemala's economy, accounting for about 22 per cent of the country's gross domestic product (GDP), and for more than half the country's total export earnings. The sector employs more than 50 per cent of the country’s labour force. About 70 per cent of the agricultural area is under cultivation, producing food staples, including maize, sorghum and beans. Commercial production includes coffee, bananas, rubber, sugar cane and livestock. The growing packing plant sector exports vegetables, fruit and flowers. A sizable proportion of small farmers and indigenous communities have contracts with exporting enterprises for their production of vegetables and fruit, which leads to significant increases in their incomes.

Economy
Guatemala is the largest economy in Central America, accounting for about a third of the region's GDP. Despite a steady decline in the agriculture sector, and blows to the economy caused by climatic events such as severe hurricanes, the country has maintained a stable macroeconomic course. GDP, which was US$35.3 million inn 2006, has almost tripled since the mid 1980s, and is currently growing at an average yearly rate of 4 per cent.

Growth is mainly a result of expansion in industry, trade and services and foreign investment. In recent years there has been constant growth and wide diversification in exports.

Source: IFAD