Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last Published: 8/26/2019

Guatemala is the northernmost country in Central America with Mexico to the north and west, Belize and the Atlantic Ocean to the east, Honduras and El Salvador to the southeast and the Pacific Ocean to the south.  Famed for its volcanoes, lakes, textiles, Mayan ruins, and temperate climate in the highlands, Guatemala is the gateway to a large regional market for U.S. goods and services.

The United States and Guatemala have long enjoyed a largely positive working relationship, both politically and economically. Despite this relationship, the country has often been beset with problems.  A combination of economic stagnation, weak governance, and insecurity continues to be a major challenge.  The recent surge in migration to the United States and Mexico from Honduras, El Salvador, and Guatemala is just one product of Central America’s inability to find solutions to the challenges the region faces.  Current efforts by Central American governments, United States, and other regional governments have proven insufficient to achieve meaningful progress in addressing these challenges.  Absent significant progress, security may deteriorate, institutions will not be able to provide services to their citizens, millions will remain in poverty, and political instability may grow. 

The cornerstone of the U.S. commercial policy for the region is the United States – Central America – Dominican Republic Free Trade Agreement (CAFTA-DR).

In general, the Agreement has been very successful for all parties.  Intra-regional trade among Central American countries and the Dominican Republic increased from US$6.3 billion in 2010 to more than US$10 billion by 2018.  U.S goods exports to Central America and the Dominican Republic have more than doubled since 2004 (prior to the Agreement taking affect for the first signatories).  Nevertheless, the Agreement has been unable to solve some of the regions most serious problems – including physical insecurity and corruption.

Guatemalan GDP reached an estimated USD 78.45 billion in 2018, with an estimated 3.0 percent growth rate in 2018.  The United States and Guatemala enjoy a growing trade relationship, which became even stronger after the entering into force of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). As of January 1, 2015, 100 percent of U.S. consumer and industrial goods enter CAFTA-DR countries duty free (for goods that meet the country of origin requirements). The United States is Guatemala’s largest trading partner accounting for nearly 40 percent of Guatemala’s trade.

U.S. merchandise exports to Guatemala were USD 6.6 billion in 2018.  Leading U.S. exports to Guatemala include mineral fuel, oil, nuclear reactors and machinery, electric machinery and cereals (corn, wheat and rice).  U.S. imports from Guatemala were USD 4.2 billion in 2018, a slight increase from 2017.   U.S. imports include edible fruits and nuts; knit aparel; coffee, tea and spices; woven apparel; edible vegetables, roots and tubers.

The preliminary data from the Bank of Guatemala (BANGUAT) show that the flow of FDI totaled USD 1.03 billion in 2018 (1.31 percent of GDP), an 11.8 percent decline compared to USD 1.17 billion (1.55 percent of GDP) received in 2017.  Activities that attracted most of the FDI flows over the last three years were commerce, manufacturing, electricity, banking and insurance, and telecommunications.
U.S. products and services enjoy strong brand recognition in Guatemala, and U.S. firms have a good reputation in the Guatemalan marketplace.  It is estimated that approximately 200 U.S. firms have a presence in the market.

With a population of around 16 million, it is the most populous country in Central America and accounts for more than one-third of the region’s GDP.  The capital, Guatemala City, has a population of approximately 4 million and features first-class hotels and restaurants.
A key component to Guatemala’s economy is remittances from migrants, most of whom have settled in the United States.  In 2018 remittances increased by 13.4 percent and were equivalent to 11.8 percent of the GDP.

The economy is largely informal, with estimates upwards of 70 percent of employment, which is one of the reasons that tax revenue is the lowest in the region at 10 percent of gross domestic product and ranks 209th out of 220 countries in terms of revenues.  A low tax base, combined with a reluctance to take on sovereign debt and new procurement laws to combat corruption, have resulted in government expenditures also being low.  Guatemala’s governmental expenditures are equivalent to only 12 percent of gross domestic product compared to a regional average of 18 percent.

The U.S. Strategy for Central America complements Guatemala’s counterpart initiative, Alliance for Prosperity (A4P).  The A4P, launched in 2014 coordinated with other Northern Triangle governments, is a $1.3 billion national development plan for Guatemalans to improve type, quantity, and quality of public services and works projects in 54 targeted municipalities, primarily in areas where most migration originates.  The A4P continues to serve as Guatemala’s primary national development policy for the country and while the government’s leadership and the public’s understanding of the A4P have improved, still significant stides need to be taken to improve economic opportunites for Guatemalans.  

The Embassy has bolstered Guatemala’s A4P by politically and financially backing a government-led dialogue with over 80 indigenous leaders in Guatemalan departments with the highest numbers of outward migration.  The aim of the dialogue is to improve the quality and coverage of public services and projects in targeted indigenous communities to reduce illegal migration. This is a key focus as compared to 2018.

Increasing numbers of Guatemalans have abandoned the country to migrate illegally to the United States in 2019, returning to levels not seen since 2015.  DHS apprehended more than 115,000 Guatemalans at the southwest border in FY 2018, and as of May 12, DHS apprehended just under 185,000 Guatemalans in FY 2019.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.