Guatemala Country Risk Rating

Guatemala remains medium-high risk rating overall, with governance and security risks offsetting relatively strong macroeconomic fundamentals. Political violence is medium-high, legal & regulatory risk is high, supply-chain disruption and political interference are medium-high, while the risk of doing business is also medium-high. President Bernardo Arévalo’s anti-corruption agenda continues to face resistance from parts of Congress, the prosecution service and the judiciary, contributing to institutional confrontation and uncertainty ahead of the 2027 election cycle. Organised crime, extortion and gang violence remain important security concerns, while weak public institutions and slow judicial processes complicate contract enforcement. Infrastructure deficiencies, particularly roads and logistics, also constrain competitiveness and explain part of the medium-high supply-chain rating.

The macroeconomic position is considerably stronger. The IMF expects growth of around 3.8% in 2026 after Q1 activity expanded by 4.4% year-on-year. Private consumption is supported by exceptionally strong remittance inflows from Guatemalans abroad, while FX reserves reached around USD32.7 bln and the 2025 current-account surplus was approximately 4.7% of GDP. Inflation is expected to remain within the central bank’s 4% ±1 percentage point target range by the end of 2026, allowing monetary policy to remain broadly supportive. Sovereign non-payment risk is medium, exchange transfer risk is medium-low and the government’s inability to provide stimulus is medium-low. Public debt is low at around 27% of GDP, providing meaningful fiscal resilience, although chronically weak tax collection limits the government’s ability to address infrastructure, education and healthcare gaps. Banking-sector vulnerability is also medium-low, supported by stable capitalisation and liquidity. The main external vulnerability is Guatemala’s dependence on U.S. remittances: tighter U.S. immigration policy or weaker U.S. employment could reduce household income and domestic demand. Guatemala’s strong balance sheet and conservative macroeconomic management provide a buffer against shocks, but corruption, organised crime, infrastructure deficiencies and political confrontation continue to prevent the country from achieving a lower overall risk rating.