The U.S. Department of State’s Investment Climate Statements provide information and analysis of the business climates of more than 170 economies that are or could be markets for U.S. businesses. The ICS are prepared by economic officers stationed in embassies and posts around the world. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are economically sound, address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Guatemala has the largest economy in Central America, with a $ 94.7 billion gross domestic product (GDP) in 2022. The economy grew by an estimated 4 percent in 2022 following an 8 percent rebound in 2021. Year-on-year inflation reached 9.24 percent in 2022 mostly due to the increase in international energy and food prices attributable to Russia’s invasion of Ukraine. Remittances, mostly from the United States, increased by 17.9 percent in 2022 and were equivalent to 19 percent of GDP. The United States is Guatemala’s most important economic partner. The Guatemalan government continues to make efforts to enhance competitiveness, promote investment opportunities, and work on legislative reforms aimed at supporting economic growth. More than 200 U.S. and other foreign firms have active investments in Guatemala, benefitting from the U.S. Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). Foreign direct investment (FDI) stock was $22.5 billion in 2022, a 5.3 percent increase over 2021. FDI flows dropped by 61 percent in 2022 mostly due to the extraordinary 2021 FDI inflow through the purchase of outstanding shares of a local company by a foreign telecommunications company. Some of the activities that attracted most of the FDI flows in the last three years were information and communications, financial and insurance activities, manufacturing, commerce and vehicle repair, water, electricity, and sanitation services.
Despite steps to improve Guatemala’s investment climate, international companies choosing to invest in Guatemala face significant challenges. Complex laws and regulations, inconsistent judicial decisions, bureaucratic impediments, and corruption continue to impede investment. Citing Guatemala’s CAFTA-DR obligations, the United States has raised concerns with the Guatemalan government regarding its enforcement of both its labor and environmental laws.
Guatemala’s Climate Change Framework Law established the groundwork for Guatemala’s Low Emission Development Strategy (LEDS) and is designed to align Guatemala’s emissions and development targets with national planning documents in six sectors: energy, transportation, industry, land use, agriculture, and waste management. In November 2020, the Guatemala government endorsed the LEDS as the country’s official strategy for climate change mitigation.
As part of the government’s efforts to promote economic recovery during and after the COVID-19 pandemic, the Ministry of Economy (MINECO) began implementing an economic recovery plan in September 2020, which focused on recovering lost jobs and generating new jobs, attracting new strategic investment, and promoting consumption of Guatemalan goods and services locally and globally.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.