Page 58 - STRATEGY Magazine (G)

GUATEMALA: ECONOMY
Although Guatemala has experienced some level of political stability in the last two decades, the nation’s course remains uneven, as the political turmoil in 2015 indicated. Yet investment opportunities are on the rise, particularly in energy, agriculture, and service industries like business process outsourcing.
After the conclusion of the 36-year Civil War that devastated the entire nation, Guatemala finally began to experience economic growth and political stability in the first years of the 21st century. Although poverty and unequal income dis- tribution still plague the nation, Guatemala has maintained its status as Central America’s largest economy, with a gross domestic product (GDP) of US $58.7 billion and a per capita income of US $2,379.99. In 2014, GDP growth measured 4.2 percent, while experts predicted just under 4.0 percent by the end of 2015. Forecasters are expecting a slightly slower but steady growth rate of 3.7 percent through 2016. To boost this number in the coming years, public and foreign direct invest- ment (FDI) must continue to grow, while the obstructions that hinder expansion must be eradicated.
Various free trade agreements (FTAs) have advanced FDI, while the development of free trade zones has fostered these relationships and allowed for the elimination of certain taxes for investors. The average tariff in Guatemala is 2.7 percent, and foreign investors have the ability to repatriate their profits. Foreign investors will, however, experience some limitations when it comes to the ownership of land, such as
being prohibited from owning land immediately next to riv- ers, oceans, and international borders. Past transfers of titles are also inadequately documented, leaving large gaps in the public records and thus confusion of actual ownership.
Sectors such as energy, agriculture, and the services indus- try offer remarkable potential for investment. The country’s exports totaled US $10.8 billion in 2014 and US $7.46 billion through August of 2015. In the 2015 Index of Economic Freedom, Guatemala ranked 87th in the world and 17th in the region—a clear sign that the capacity for improvement remains.
ECONOMIC PILLARS
Perhaps the most important sector of the Guatemalan econ- omy is agriculture, which accounts for 13.7 percent of GDP and anywhere from one-third to one-half of the total labor force, depending on the season. Sugar and coffee are the main agricultural exports, and bananas, vegetables, live- stock, and other products contribute significantly to GDP.
Energy and industry also play a vital role in Guatemala’s economy. The nation is a net exporter of electricity to the
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