FDI continues to increase

By Mayora IP

Foreign Direct Investment (FDI) in Guatemala totaled US 851 million in eight months of 2021, according to statistics released by the National Competitiveness Program (Pronacom), which depends on the Ministry of Economy. Only in August seven new projects were completed for an investment of US 154 million.

The Foreign Investment Law in Guatemala specifically notes that foreign investors enjoy the same rights of use, benefits, and ownership of property as Guatemalans. There are no impediments to the formation of joint ventures or the purchase of local companies by foreign investors. With minor exceptions, all sectors of the Guatemalan economy are open to foreign investors, who are treated on an equal footing with local investors. Overall, the business climate is characterized by sound legislation and a liberal approach to economic activity.

To strengthen FDI, Guatemala has established fiscal incentives for companies operating in its new special economic zones, called special public economic development zones. Among the tax benefits provided to investors in these zones are an exemption for ten years from income tax and a temporary suspension of taxes associated with imports.

Recently, the Executive Board of the International Monetary Fund (IMF) concluded its 2021 Article IV consultation with Guatemala.
According to the IMF, economic activity is projected to expand by 4½ percent in 2021, with leading indicators showing a recovery in the key sectors of commerce, manufacturing, and construction. The outlook is supported by the U.S. recovery, powered by the vaccine and the American Rescue Plan, and improving prospects in remaining trade partners. Over the medium term, growth is projected to stabilize at its pre-COVID potential rate of 3½ percent by 2023. 

“The economic impact of COVID-19 has been mild given an early reopening of the economy, unprecedented policy support, and resilient remittances and exports,” the IMF stated.