Guatemala

Dimension Scores

Narrative

Guatemala (): Credibility is adequate (75/100). Inflation at 4.0% is close to the 4.0% target. Geopolitical risks are contained.

AI Analysis

Guatemala maintains an adequate credibility score of 74.8/100, but faces a significant credibility gap of 100.0/100 due to persistent geopolitical risks and ongoing armed conflicts. Recent events, including multiple armed attacks and high levels of violence, have worsened the security environment, undermining institutional confidence. While inflation is on target at 4.0%, the central bank lacks data on policy rates and communication, limiting transparency. Institutional investors should closely monitor the escalating violence and its impact on macroeconomic stability, as well as the central bank’s response. The country’s regional ranking at #1 in Latin America & Caribbean reflects its relatively stronger position, but the geopolitical risks remain a critical drag on credibility and long-term growth prospects.

Guatemala’s credibility position remains adequate at 74.8/100, but a credibility gap of 100.0/100 highlights significant challenges. The central bank has maintained inflation within its 4.0% target, with no deviation from the band, suggesting some degree of control over price pressures. However, the lack of policy rate data and absence of scored communication signals from the central bank limit the ability to assess the appropriateness of monetary policy. The geopolitical environment has deteriorated sharply over the past 30 days, with multiple armed conflicts and attacks reported across the country. Events such as the armed attack in San José Pinula, the rise in feminicidal violence, and the increase in cyberattacks have contributed to a Goldstein score of -10.0 for several incidents, signaling heightened instability. These developments pose a direct threat to economic and institutional stability, with implications for both public safety and investor confidence. The central bank’s lack of public communication and absence of policy rate data further complicate the assessment of its stance and effectiveness. Looking ahead, the primary risks to credibility remain the persistent violence, the potential spillover effects of regional instability, and the need for stronger institutional responses to mitigate these threats. Investors should closely monitor both the central bank’s actions and the evolution of geopolitical tensions, as these will be critical determinants of Guatemala’s macroeconomic trajectory and long-term credibility.

Macro Indicators