Economic Overview & Business Opportunities – Guatemala
Guatemala is a Central American country geographically just south of Mexico, which became independent in 1841. Its borders include the Pacific Ocean, the Gulf of Honduras, Belize, and El Salvador. With roots in the Mayan civilisation, Guatemala has a long and colourful historical lineage. It was part of the Spanish conquest, the First Mexican Empire, and the Federal Republic of Central America.
Guatemala is a relatively stable, upper-middle-income country. Its market economy is robust and competitive, creating numerous business opportunities in Guatemala. As of 2022, its population stands at 18.6 million, with a gross domestic product (GDP) forecast of USD92 billion. Its major exports include coffee, sugar, spices, bananas, clothes, precious metals, and palm oil.
The Economy of Guatemala
The business climate continues to be sustainable and responsive toward investment opportunities, reflecting the country’s overall macro stability. With the US as a significant economic partner, the economy of Guatemala remains the largest in Central America. Active foreign direct investments (FDIs) continue to grow in Guatemala at a rapid rate, increasing by 19.7% from 2021. As of 2022, the forecast economic growth figures include an FDI of USD325 million and a real GDP of 4%.
The International Monetary Fund’s recent report (IMF 2022) notes that Guatemala continues to experience a sizeable surge in imports. The report also reinforces the fact that Guatemala’s banking sector remains robust and projects a growth of 4% in 2022. The inflation index is increasing but remains within the forecast spectrum with an average of 4.4%. Guatemala is a member state of the United Nations, the World Trade Organisation, the IMF and several other prestigious institutions.
Its manufacturing, tourism, and agricultural industries are showing both resilience and steady growth, crucial factors for business opportunities in Guatemala. Other sectors, such as telecommunications and financial services, contribute significantly to its stable and growing economy. Guatemala is also a crucial gateway to Central America and several other key North American economies. Its ports are one of the busiest, providing access to Europe, Asia-Pacific and the Americas.
Why Invest in Guatemala
Guatemala is a sought-after destination by investors, with governance and reforms targeting and supporting overall economic growth. While volatile international factors, such as the war in Ukraine, do impact the outlook, Guatemala is weathering the risks well.
The Government continues to strengthen the economy with investor-friendly legislative reforms while promoting a competitive market and investment prospects. In collaboration with the private sector, the Government is rolling out its Guatemala No Se Detiene (Guatemala Won’t Stop) agreement. It aims to promote industry-diverse trade and market competition while attracting more investment.
A fine balance mitigates the rise in the budget for infrastructure against the effect of greater import pricing. There are also inroads into rolling out solid digitalisation and telecommunications as the adoption of technology continues at a rapid pace. This policy and governance mix is advantageous for business opportunities in Guatemala, boosting recovery, growth, and good credit conditions.
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