While declining international prices and smuggling are threatening factors for agricultural production in Guatemala, planned investments in infrastructure would help reduce the costs of the sector.
Friday, January 18, 2019
Estimates by the Bank of Guatemala (Banguat) detail that the agricultural Gross Domestic Product increased 2.6% in 2018, and by 2019 a 2.8% increase is expected. Although the variations registered and projected are positive, the growth of the sector's production is still below the average of the national economy.
The Chamber of Agriculture (Camagro) presented on January 16 the economic and agricultural outlook for 2019, in which it identifies some opportunities and threats to the performance of the sector this year.
Among the main challenges identified by agricultural businessmen is the drop in international commodity prices, such as sugar, coffee, African palm and rubber.
Another factor negatively affecting is product smuggling, as the devaluation of the exchange rate in Mexico has also impacted the local market. Prensalibre.com reports that according to Central American Business Intelligence (Cabi) "... the product smuggling to the country has increased. The 45 or 50% of agricultural production in Guatemala is transformed by the food and beverage sector in its manufacturing process of products but smuggling has been increasing and affects the demand for domestic products according to that firm."
The lack of legal certainty is another issue affecting the country, since the problem of the invasion of productive farms is a reality that negatively impacts agriculture.
Regarding the opportunities of the agricultural sector, it is expected that this year the prices of commodities will increase by 20%. In addition, if the country invests in improving the road network and ports, transport costs will decrease, which could generate more investment.
About the expectations for this year, Paulo de León, Cabi's consultant, explained that "... At a general level, the expectations of the economic behavior for 2019 are better since it is expected that exports, investments and credit will recover."
The economic slowdown in the U.S., the main trading partner, partially explains the 6% year-on-year drop in the Industrial Activity Index reported during the first quarter of the year.
According to the Industrial Activity Index (IAIG) compiled by Central American Business Intelligence (CABI), the productivity of the 14 industrial sectors have been affected by the increase in the price of gasoline, the new fall in commodity prices, the stagnation of national investment and smuggling.
Lack of legal certainty, lack of investment and excessive bureaucracy are some of the factors influencing industrial activity in Guatemala not to advance in 2018.
The Guatemalan union of the sector reported that the Industrial Activity Index (IAIG) registered a 2% decrease between December 2017 and November 2018, going from 145.67 to 142.70.
The growth of family remittances, the recovery of credit to the private sector and the upturn in investment in capital goods would determine a better economic performance this year.
In a forum organized by the Chamber of Industry of Guatemala, representatives of the Bank of Guatemala (Banguat) and Central American Business Intelligence (CABI), agreed that this year the country's economy could register a better performance than in 2018.
Urban growth has increased demand for agricultural products, and the limited local supply is insufficient to meet the needs of the market.
Guatemala has experienced higher than world average urbanization and the sector can no longer meet its cities growing demand for agricultural products.
×
ok
6931Government Procurement Opportunities in the region
español
6931
