Because of the economic crisis, Foreign Direct Investment flows have practically vanished, and in order to attract the few investments that are projected for next year, countries are expected to compete by offering incentives and aid programs for businesses.
The covid-19 outbreak dissipated the investment intentions of companies globally. At the beginning of the fourth quarter of the year, there are signs that business confidence has begun to recover; however, pessimism among investors is expected to continue next year.
The health and economic crisis will result in a reordering of foreign investment at the global level, and countries like Central America will have the opportunity to take advantage of their geographical position to attract fresh capital.
The outbreak of covid-19 worldwide will cause a drop in production in 2020, however, by 2021 and 2022 the forecasts of international organizations anticipate that economic activity could rebound, a rise that would be coupled with new investments in various markets and sectors.
From January to September 2019, the country received $671 million in foreign direct investment, 6% more than in the same period in 2018.
Figures from the Bank of Guatemala show that between the first nine months of 2018 and the same period in 2019, foreign direct investment (FDI) that reached the country increased by $39 million, from $671 million to $632 million.
From January to June 2019, the country received $536 million in foreign direct investment, 2% less than in the same period of 2018.
According to data from the Bank of Guatemala, between the first semester of 2018 and the same period of 2019, foreign direct investment (FDI) that arrived in the country decreased by $10 million, going from $546 million to $536 million.
In Guatemala, businessmen are asking the incoming government to create a public policy on foreign investment that incorporates issues such as fair and equitable treatment of investments, the minimum standard of treatment and the definition of arbitrariness.
Foreign direct investment (FDI) in the country is not having its best moment, as figures from the Bank of Guatemala indicate that in 2018 the flow captured was $1.031 million, 12% less than the $1.170 million reported in 2017. See official data.
Panama and Honduras were the only two Central American countries to report increases in foreign direct investment in 2018 over the previous year, with year-on-year changes of 36% and 3%, respectively.
The growth of investments directed to Panama, which concentrated 51% of the sub-regional total, explained the increase that was reached in 2018 in Central America (9.4%), since except Panama and Honduras, the Central American countries received less Foreign Direct Investment (FDI) than in 2017, explains the report "Foreign Direct Investment in Latin America and the Caribbean 2019", produced by the Economic Commission for Latin America and the Caribbean (ECLAC).
Most of the reported increase in foreign investment flows to the country in the first quarter of the year was explained by investments in the electricity sector.
In the first quarter of 2019, figures from the Bank of Guatemala (Banguat) report a considerable increase in foreign direct investment (FDI) compared to the same period last year, going from $293 million to $340 million.
Data from the Bank of Guatemala indicate that in 2018 the amount of foreign direct investment (FDI) that attracted the country reached $1.032 million, $738 million lower than the $1.170 billion registered in 2017.
Data from the Bank of Guatemala indicate that in 2018 the amount of foreign direct investment (FDI) that attracted the country reached $1.032 million, $738 million lower than the $1.170 billion registered in 2017.
Despite the location and the fiscal benefits that in some cases the countries of the region offer, the lack of education of the population will be the main barrier to continue attracting large investments.
The lack of guarantee of finding the competent and sustainable human capital necessary for the proper operation of companies is an issue that negatively influences the attraction of important investments in Central America.
In the last eleven years in Guatemala, companies providing telecommunications services have invested just over $1.26 billion in the sector.
Figures from the Bank of Guatemala specify that Telecommunications is the fourth most important economic activity, according to the flows of Foreign Direct Investment that have reached the country, since between 2007 and 2018 an average of $105 million per year has been invested.
Since the free trade zones law was amended, almost 100 companies have closed in Guatemala in the last two years, and by 2019 the figure is expected to keep growing if the regulatory framework is not modified.
Data from the Bank of Guatemala detail that from January to October of this year, exports of companies in free trade zones totaled $471 million, 2% less than the $479 million registered in the first ten months of 2017.
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.
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.
During the first semester of the year the country acquired $546 million in Foreign Direct Investment flows, 4.6% less than the $573 million reported in the same period of 2017.
According to the figures of the Banco de Guatemala of the total Foreign Direct Investment (FDI) from January to June of this year, $183 million went to the Trade sector, $97 million to the Manufacturing Industry, $89 million to Banks and insurance companies, $58 million to Telecommunications and $52 million to Electricity.
Partly explained by the regimes created to encourage investment in different sectors, countries in the region went from receiving $11 billion in 2016, to $12.1 billion last year.
According to a study by the Center for Economic Integration Studies, in 2017 inflows of Foreign Direct Investment (FDI) in the region reached a record figure of $12.083 billion, registering an increase of 9.8% compared to 2016.When analyzing the period from 2010 to 2017, it can be seen that the inflow of FDI has increased considerably, showing a growth rate of 7.9%.
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