A study by a think tank in Guatemala found that violence cost the country $6.7 billion in 2012, highlighting the economic impact of that Central American nation’s struggle against crime.
The study by Fundesa pulls together statistics from various outside sources to paint a picture of the economic cost of Guatemala’s violence, relying heavily on the 2013 Global Peace Index report by non-governmental organization the Institute for Economics and Peace (IEP). Based on these figures, last year Guatemala spent eight percent of its GDP on costs related to violence and insecurity, or about $6.7 billion.
This works out to about $455 in insecurity costs per citizen in Guatemala, the Fundesa study states.
The Global Peace Index calculated the cost of combating violence by examining military, police, private security, and prison spending; and costs associated with treating victims of violence and displacement, among other factors.
Going by the Global Peace Index figures, the cost of Guatemala’s violence is lower than in other crime-racked Central American countries. Honduras spent $6.9 billion on insecurity last year, or 17 percent of its GDP, while insecurity cost 14 percent of El Salvador’s GDP. In comparison, violence cost just five percent of Nicaragua’s GDP, and four percent of Costa Rica’s.
InSight Crime Analysis
Other international bodies have made similar estimates regarding the cost of insecurity in Central America. Last year, a World Bank representative said that violence is costing Honduras 10 percent of its annual GDP. Meanwhile, the United Nations said that insecurity cost Guatemala 7.3 percent of its GDP in 2008. A comparison with military spending indicates just how high that proportion is — last year the Guatemalan government reportedly spent just 0.4 percent of GDP on its Armed Forces. Notably, Guatemala has the lowest tax collection rate in Central America.
It is clear that violence places incredible economic pressure on countries like Guatemala. According to Fundesa, World Bank figures state each violent death in Guatemala costs the country over $13,760 per year. That said, homicide rates are slipping downwards in Guatemala, reaching 32 homicides per 100,000 people in 2012, down from 39 per 100,000 the previous year (although violence figures for 2013 are trending upwards again).
Homicide Rates in Central America