The word “Guatemala” derives from the word “guauhtemallan” meaning “Land of Trees” in the indigenous Guatemalan language of Nahuatl.  A country of 108,889 km,2 Guatemala has 51.1%, or 55,700 km,2 of land classified as suitable for forestry (“territorio de vocación forestal”). The actual forest cover is nearer to 41% or 30,754 km.2 Unfortunately, natural forest cover is now being lost at an accelerating rate of approximately 84,000 hectares per year because of the perception that the land is more profitable when used for cattle and agriculture.

Politics
Guatemala has had a civilian democracy since 1986 and received global recognition in 1996 when the Peace Accords were signed. As a result, the country has matured into a stable, democratic government with 5 consecutive democratically elected presidents. The democratic system consists of a president, legislative branch and judicial system, which is very similar to the U.S.  Each president can be elected to a single, four year term.  

Economics
Guatemala is the pillar of macroeconomic stability in Central America with 36.7% ($29.3b) of the region’s GDP (see graph below). Its growth is projected between 3% and 4% for the next 2 years.  Monetary reserves are the best in all of Central America and Fitch Ratings just upgraded Guatemala to BB+ (February 2006), which is higher than Costa Rica. Guatemala has also been recognized by many international businesses as the right Central American partner. Wal-Mart just purchased a 50% interest in the largest retail chain in Central America, which has its headquarters in Guatemala, and Starbucks has chosen Guatemala as its largest single coffee supplier with 40% of their coffee coming from Guatemala.

Guatemala's economy, Central America's largest, is expected to expand by 3.2 percent this year, the same as last year, according to the IMF. The Guatemalan government itself is aiming at growth of 4.4 percent, while Bear Stearns forecasts an economic expansion of 4.0 percent, which is higher than the U.S.

"Despite the monetary and fiscal pressures that resulted from high international oil prices and the damage inflicted upon the country by Hurricane Stan, the Guatemalan economy performed reasonably well in 2005, supported by sound macroeconomic policies," Bear Stearns points out.
Inflation is set to fall to 5.3 percent in 2006 - from 7.6 percent in 2005, the IMF forecasts. That will be the lowest rate in seven years.

"Guatemala continues to consolidate its position as one of the region's foremost market performers," Bear Stearns says. "We like the credit outlook, and believe that it is under-rated by the rating agencies."

On the negative side, challenges include the minority position of President Oscar Berger’s party in congress, the fragmentation of political parties, frequent popular protests, crime, legal challenges from NGOs and confrontations between indigenous groups and the government, the investment bank points out. "They also generate economic uncertainty and weigh on the country’s business and investment climate," Bear Stearns says