Central America is for the most part showing signs of emergence and improvement in the international marketplace. Despite fears, the region is making great strides in cleaning up its reputation and is an increasingly attractive investment prospect for foreign companies.
While much of the economy remains heavily dependent on traditional sectors such as agriculture and textiles, exciting new trends and opportunities are emerging in the subcontinent, as reflected in the rest of Latin America.
Central America’s economic outlook
Over the coming quarters, Central America and the Caribbean should continue to benefit from the booming U.S. economy, which is expected to be driven by fiscal stimulus, at least in the short term.
Strong U.S. demand should underpin exports, which will help offset the region’s rising imported fuel bill. Regional growth is forecast and expected to accelerate.
Guatemala: an emerging technology hub
With the largest population in Central America, Guatemala is a very attractive business jurisdiction that is often overlooked as a result of the poverty and security problems that used to plague the region, but do not overlook the large companies that have emerged there, such as CMI, a diversified company driven by the Bosch Gutierrez family.
Although the country has traditionally been sustained by primary sectors of the economy, with important revenues coming from the production of sugar, bananas, coffee and cardamom, the recent development of a steadily growing technology sector has provided the Foreign Direct Investment (FDI) needed to promote the quality of life of its citizens and promote economic growth.
The growth of the technology sector can largely be divided into two categories; the development of Guatemala’s telecommunications sector and the emergence of new technology-related businesses. Despite suffering from some infrastructure deficiencies, the country has a “first world telecommunications infrastructure”, which has attracted close to US$80 million in FDI.
In addition, and perhaps helped by being so close to the United States, the world’s largest economy, Guatemala has joined other emerging giants in the region such as Chile and Mexico, and now has a reputation as a hub for promising new start-ups.
For example, a major telecommunications service provider has invested heavily to support Guatemalan start-ups operating in the technology sector, launching its business incubator in the country.
Guatemala’s economic outlook
Economic growth is expected to accelerate this year on the back of strong domestic demand. A tight labor market should boost wage growth, while strong remittance inflows are likely to provide a further boost to household spending. Meanwhile, public infrastructure spending should be solid.
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