Monday, April 06, 2009
Construction in Guatemala (photo: Rudy Girón/antiguadailyphoto.com)
The financial crisis in the United States seems to be having a direct effect on Guatemala’s economy. Remittances from Guatemalan migrants in the United States to their native country in Central America have dropped dramatically in the past year. According to the Central Bank of Guatemala, remittances dropped 11.4 percent in February from a year before, to $282 million for the month. Jobs most dominated by migrant workers, such as landscaping, have been among the sectors hardest hit in the United States.
Few economies in the world are tied as directly to the United States as that of Guatemala’s. Although in recent years Guatemala has taken steps to open its economy to foreign investors, in 2008 remittances alone still accounted for $4.3 billion or roughly 12 percent of the nation’s GDP, while only $724 million was spent by foreign investors and Guatemala’s famous coffee crop brought in only $646 million.. Just as in the United States, construction in Guatemala drove the economy, as migrants sending remittances to their families funded most new construction. Where once there were abundant construction jobs in Guatemala, people are now struggling to survive, many only having money to eat once a day. Although some economists argue that remittances serve as a hindrance to development, a report by the World Bank, which was edited by J. Humberto López, one of the bank’s chief economists, states that remittances to Guatemala reduced poverty by providing the money for food, shelter and basic health care.
-Ednar Segura
U.S. to Discuss Drop in Remittances with Latin American Leaders (by Ezra Fieser, Miami Herald)
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