Starting a business in Guatemala has become increasingly popular among investors over recent years, with foreign investment almost doubling between 2009 and 2019, thanks in part to a rapidly growing economy and improving security situation.
Those factors have combined with Guatemala’s strategic location at the meeting point between Central and North America, as well as the preferential access locally based businesses enjoy to key global markets, to see a growing number of foreign companies and investors showing an interest in company formation in Guatemala.
If you are considering company formation in Guatemala, read on to learn about some key benefits related to starting a business in Central America’s largest economy.
Or go ahead and contact us now to discuss your business options.
Starting a business in Guatemala: market conditions
Dominating Mexico’s southern border, Guatemala benefits from its close proximity to the major North American markets of Canada, Mexico and the United states, with flights from capital Guatemala City reaching Miami or Houston in just three hours, and Los Angeles in five hours.
Spanning the width of the Central American isthmus, the country also has high-volume ports serving both the Pacific Ocean and Caribbean Sea, contributing to Guatemala being a major hub for trade in Central America, which sees it account for roughly 30% of goods that pass through the sub-region.
The country has a large agricultural sector, responsible for almost 10% of gross domestic product (GDP), which hit $76.71 billion in 2019 following two decades of exponential and almost unbroken growth (all figures in USD). Guatemala also has a well-developed manufacturing sector, accounting for nearly 22% of GDP, while the services sector has developed significantly over the past decade and in 2019 accounted for close to 63% of GDP.
Among the country’s major export products are coffee, bananas, sugar, and manufactured garments, while Guatemala also boasts significant mineral and hydrocarbon deposits. The country also has a fast-growing tech sector, which is expected to make a significant contribution to post-pandemic economic recovery.
That sector benefits from a fast growing population, which was registered at 16.6 million in 2019, but expected to be close to 19 million by the end of 2021, providing a growing pool of workers to locally based businesses.
Like much of Central America, Guatemala has a reputation for violence and insecurity, however the country has made significant strides in improving its situation, and the intentional homicide rate almost halved between 2009 and 2019 — a period during which FDI inflows rose from $499.8 million to $966.8 million.
Benefits of starting a business in Guatemala
When starting a business in Guatemala, some key things to consider include:
- Available staff: Guatemala has a young population, with a median age of 21.3 years in 2019, and that means an increasing pool of local talent. Combined with the growth of the services and tech sectors, Guatemala has skilled workers available at competitive rates.
- Logistical conditions: As well as its proximity and ease of access to the major economies of North America, Guatemala benefits from good internal accessibility. While professional and service-based companies are generally based in or near Guatemala City, one of the benefits of Guatemala’s small size is the fact that ports and other international transport links are easily accessed for distribution of manufactured and agricultural products.
- International access: For anyone starting a business in Guatemala, the country has a number of free trade agreements (FTAs) in place, many of which have been negotiated alongside other countries in Central America and offer local businesses preferential access to key markets including Chile, Colombia, the Dominican Republic, the European Union, Mexico, Taiwan, the United Kingdom, and the United States.
- Growing connectivity: Guatemala has seen an exponential rise in internet usage and coverage over recent years, meaning that the internal market for the likes of e-commerce is growing significantly, while opportunities for Internet-based business are similarly increasing.
- Tourist popularity: Like everywhere in the world, Guatemala’s tourism industry suffered at the hands of the COVID-19 pandemic. However, the country saw visitor numbers almost double between 2010 and 2019, and the country’s tourism industry offers significant opportunities in the future.
Biz Latin Hub can assist you in Guatemala
At Biz Latin Hub, our multilingual team of back-office experts is equipped to help you with starting a business in Guatemala. Whether you are interested in company formation in Guatemala, or would benefit from legal, accounting, or recruitment support, we have the tools and expertise to be your single point of contact market entry and ongoing operations in Guatemala, or any of the other 17 jurisdictions where we operate in Latin America and the Caribbean.
Reach out to us now to get the services you need.
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