Guatemala is slowly moving away from a post-conflict stage, sharing common problems of Latin American transitional democracies, such as a fragile rule of law, weak institutions, corruption and organized crime, weak political parties, widespread poverty and deep income inequality.

At this stage, Guatemala is going through a crucial political phase in which the new administration led by President Alvaro Colom is striving to implement a rather ambitious plan centred on social cohesion policies, fight against violence, impunity, poverty and exclusion of indigenous peoples. In order to lay down the basis for financing such policies in a sustainable way and help the State to improve its "redistributive" prerogatives, President Colom envisaged a fiscal reform. However, this key initiative aimed at increasing social investments and the percentage of fiscal revenues on the GDP, has been the object of fierce opposition both from the private sector and various political forces in the Congress and is also affected by the impact of the global economic crisis.

More than 50% of population lives in poverty and 16% in extreme poverty, mainly indigenous people (73%) and rural zones (70%). Moreover, Guatemala has one of the highest GINI coefficient (0.55) in Latin. The youth situation is particularly relevant as they represent the large majority of the population. More than half live under poverty conditions, many are unemployed (52% of people between 15-29 years) or work for the informal sector, few follow secondary schools and juvenile delinquency is spreading among them. The assignation to social programs still remains one of the lowest in Latin America. The government has launched a package of new initiatives and programmes under the aegis of the Council for Social Cohesion.

The security situation has greatly deteriorated. This includes higher level of criminality, organized crime and a high rate (98%) of impunity. Discrimination against the indigenous population is still endemic in the society; human rights are threatened, in particular human rights defender. Violence against women continues to be a widespread problem. President Colom is engaged in reforming and purging the security forces, and its "National Accord on the Advancement of Security and Justice" was signed by political forces in April 2009. The UN-sponsored International Commission Against Impunity in Guatemala (CICIG) was created in 2007 for two years mandate extended in 2009 to help national institutions investigate crimes related to clandestine groups and security forces having infiltrated the state. CICIG managed to consolidate its credibility and produce first tangible results.

Increase of the oil and food prices in 2007/2008 and the international financial and economic crisis had negative impacts on GDP growth, trade, tourism and FDI, as well as decreasing levels of remittances and employment losses.