Foreign Direct Investment is Stagnating

During 2018, Guatemala received $1.175 million in FDI, barely 0.5% more than the investment reported in 2017, mainly because of the political and legal uncertainty that ruled the country.

Tuesday, December 18, 2018

Figures from the Banco de Guatemala (Banguat) report that in the last five years, the country has gained $6,139 million in foreign direct investment (FDI), being 2014 the one that registered the highest year-on-year increase when reporting a 7% rate regarding 2013.

Regarding the reasons for the null growth of foreign investment, David Casasola, analyst at the Center for National Economic Research (Cien), explained to that "... the stagnation of investment flows was influenced by the political uncertainty experienced in the country this year, especially with the Executive-Cicig conflict. There were some messages that didn't convince investors and they decided to defer their capital."

According to the analyst of the Cien, the country missed the opportunity to attract more investment from the U.S., because during 2018 the U.S. economy went through a good time.

Acisclo Valladares Urruela, Minister of Economy, said that "... in general, the indicator is positive, despite the environment of uncertainty, decision-makers responded in an appropriate way in terms of capital. The evaluation we have is positive and every week we are attending investors from different sectors, who are interested in exploring the country.

Regarding expectations for 2019, the Banguat report "Evaluation of Monetary, Exchange Rate and Credit Policy", details that expected FDI flows to grow 3% over 2018.

In this sense, the Guatemalan textile sector has optimistic expectations for 2019. Alejandro Ceballos, president of the Apparel and Textile Commission (Vestex), explains that "... several factories from Korea operating in Nicaragua, are looking for other countries to install their capital because of the political crisis."

See full report and statistics.

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