There are many factors to consider when deciding to do business with another country. The United States is one of the top industrialized countries and is highly involved in trade and investments. In evaluating a countries economic situation you can learn a lot about the risks and benefits of doing business with or in that country. For the United States to do business with Guatemala the factors to be considered include: international trade, exchange rates, Foreign Direct Investment, Economic structure and performance, cultural complications, as well as Social and Political stability.
Guatemala is the most populated Central American country. The country is dominated by the private sector. The United States is Guatemala’s largest trading partner providing approximately 36% of imports and receiving approximately 42% of the country’s exports. The country of Guatemala has experienced economic growth for the past 3 years and is expected to continue these growth patterns. Guatemala’s growth is estimated to increase by approximately 3.5% in 2013.
Being a member of the Central American Common Market (CACM) which includes Costa Rica, Nicaragua, El Salvador, and Honduras; Guatemala has worked towards full implementation of a common external tariff (CET) with very little if any tariffs between the members of CACM. Tariffs on products from sources other than those of CACM have been between one and nineteen percent.
Although Guatemala would like to welcome foreign investment the complex and confusing laws and regulations seem to discourage it. The government passed a law on foreign investment in attempt to address some of the issues. Restrictions still remain on sectors including: public utilities, auditing, insurance, mineral exploitation, forestry, and the media. In an attempt to help for the need of additional investment in telecommunications they adopted legislation liberalizing ownership, access controls, and reverse monopolizing sectors.
Agriculture, Manufacturing, and Commercial business are said to be the main sources of growth and the recovery of construction is expected to continue. A high vulnerability to inflation will remain a concern for Guatemala however statistics forecast this will stay in control through 2014. Imports and exports in Guatemala are expected to trend upward in 2013 and the following years. The outlook of economic growth has remained better recently although it deteriorated greatly during the global financial crisis. As the United States economy improves Guatemala should experience improvement as the United States is Guatemala’s main trading partner.
The currency in Guatemala is the Guatemala quetzal. The exchange rate from GTQs to USD is approximately 1 to 8.06 according to exchange rate indicators. The Central Bank of Guatemala instated a flowing exchange rate policy and enforces it. “When the current exchange-rate equals, exceeds, or falls more than 0.5% of the exchange-rate moving average from the last five business days,...