2023 POLICY ROADMAP

In 2023 the Guatemalan economy was expected to grow by just under 4%, with inflation a little higher at just over 4%, and with a fiscal deficit running at nearly 3% of GDP. Inflation has had more impact on the low-paid than on entrepreneurs, given that price increases had been highest for food.

The political economy was dominated by uncertainty in 2023, because, following the general election, the Public Ministry had launched investigations into the incoming elected President and his political party. These were widely interpreted as a concerted effort to circumvent the peaceful transition of power. Under these circumstances, the entrepreneurial environment was not a priority.

2023 Framework Conditions Review1

Guatemala has an overall environment for entrepreneurship that is weak but stable. In 2023, Guatemala had four of the 13 Entrepreneurial Framework Conditions (EFCs) scored as sufficient or better, leaving nine as less than sufficient. As with many economies, and as it had been the year before, Physical Infrastructure scored the highest of Guatemala’s EFCs, and Entrepreneurial Education at School the lowest.

Despite having four sufficient EFCs, Guatemala also had five EFCs scored at less than three, or very poor, and each ranked in the bottom 10 among the 49 economies participating in the GEM National Expert Survey (NES) in 2023. Guatemala’s framework conditions are highly variable, with a few good ones and far too many that are very weak.

In 2023, Guatemala had an overall entrepreneurial environment score of 3.8, the same as the previous two years.

New questions saw national experts assessing an economy’s social support for women entrepreneurs, and whether they had equal access to resources relative to their male counterparts. Guatemala scored 3.1 for social support and 4.3 for relative access to resources, both much less than sufficient.

2023 Entrepreneurial Activity Review

In the GEM Adult Population Survey (APS), two in five adults in Guatemala reported that their household income had fallen in 2023, a substantial proportion but an improvement on the three in five just one year earlier.

Guatemala is one of the Latin America & Caribbean economies that has given the region a reputation
for high levels of entrepreneurial activity, and this continued in 2023, with the five economies with the highest levels of new entrepreneurial activity in GEM all being from this region. Guatemala had one in three adults starting or running a new business, placing it second overall behind Ecuador. Men
were more likely to be starting a new business than women, but not by much. Established Business Ownership levels were also high at 13%, up from the previous year and sixth highest in GEM. These figures imply nearly three people starting or running a new business in Guatemala for every person owning an established one, and may point to some difficulty in new businesses enduring long enough to become established, a transition not helped by the weak entrepreneurial environment noted earlier.

Given these high levels of entrepreneurial activity, it is not surprising that entrepreneurship is high-profile in Guatemala, with seven in 10 adults knowing someone who had recently started a business (second highest in GEM), a similar proportion seeing good opportunities to do so (fifth highest in GEM), and nearly four out of five adults considering they had the skills and experience to start a business themselves (fourth highest in GEM). Two in five of those adults seeing good opportunities would not start a business for fear it might fail. Finally, of those not already starting or running a business, two in five intended to start their own within the next three years.

Nearly nine in 10 new entrepreneurs agreed with the motivation to earn a living because jobs are scarce, closely followed by eight out of 10 agreeing with the motivation to build great wealth or very high income. Three in four new entrepreneurs expected to use more digital technology in the next six months, while very few (one in 30) had any customers outside of their own country. Finally, while well over half of those starting or running a new business were solo entrepreneurs, one in four new entrepreneurs expected to employ at least another six people over the next five years, a laudable ambition but unlikely when so few make it to become established businesses.

1 A brief description of the GEM approach is given in the footnote on p. 107 of the GEM Global Report.