Country report Guatemala

Economic Overview

Guatemala has encountered proceeded with economic stability that can be attributed to a mix of inflation focusing on, judicious monetary administration and oversaw skimming conversion scale. The nation has been a strong financial entertainer as of late, with a GDP development pace of 3.1 percent in 2016, 2.8 percent in 2017 and 3.1 percent in 2018. The nation’s economy is required to develop by 3.3 percent in 2019 and 2.8 percent in 2020. 

Deliberately situated, with generous characteristic assets and a youthful multi-ethnic populace, Guatemala can possibly produce development and success for its kin. 

Disparities persevere crosswise over land zones and among ethnic gatherings, with Indigenous Peoples proceeding to be especially impeded as the 2018 statistics re-affirms. 

Other progressively significant difficulties for Guatemala are strengthening  administration, expanding responsibility and resident interest and improving degrees of open security.

Main sectors of industry

Main industries in Guatemala include production of coffee; production of textiles, paper industries, petroleum, pharmaceutical products, and rubber processing; and tourism. The nation – which has a little mining industry removes copper, zinc, iron and nickel – additionally has solid geothermic and hydroelectric potential. The agrarian area represented 10.06% of GDP in 2017 and utilized 29.02% of the dynamic populace in 2018. Other than espresso, Guatemalan agribusiness includes sugar, bananas, cotton, elastic, cardamom and an assortment of valuable woods and extraordinary organic products. Ranch people group, generally indigenous, have been uprooted via land imbalance, low estate compensation, and because of nourishment uncertainty in the palm oil industry (Al Jazeera). 

The  industry sector represented 25.27% of GDP in 2017 and 21.07% of work in 2016. Work at the Escobal silver mine in which U.S. organization Tahoe Resources had contributed over USD 500 million was unexpectedly suspended by judges to require indigenous interview with close by Xinca people group; the choice was maintained by Guatemala’s Supreme Court (Reuters). 

The service sector represented the biggest portion of GDP (62.14% in 2017) and utilized half of the populace in 2018. Key assistance areas incorporate the travel industry, human services, client care, money related administrations, banking organizations, friendliness, correspondences, and retail. The travel industry specifically became 14% in 2018 (Prensa Libre).

Taxes in Guatemala

  • Taxation of dividends – 5%. 
  • Capital additions – 10%. 
  • Rate –  25% (a solidarity charge additionally applies to organizations that select the general system). Under the optional tax regime, tax is required on month to month net income at a pace of 5% or 7%. 
  • Incomes arranged as automated revenue earned by inhabitants are exhausted at the accompanying rates on the gross sum: 5% on profits; 10% on premium; 10% on salary from leases of versatile property; and 7% on leases of land. 
  • Revenues categorized as passive revenue earned by residents are taxed on the gross sum: 5% on dividents; 10% on interest;  10% on income from leases of movable property; and 7% on leases of real estate. 
  • Real property tax – progressive rates up to 0.9%. 
  • Social security12.67% for the business and 4.83% for the representative. 
  • Stamp duty – 3%

Investing in Guatemala

According to the 2019 UNCTAD World Investment Report, Guatemala received USD 1.056 million for FDI inflows in 2018 and showed an increase compared to last year (USD 1.013 million). 

Guatemala positions as the 98th nation in the World Bank’s 2019 Doing Business report. The nation likewise positioned 144th out of 180 nations in Transparency International’s 2018 Corruption Perceptions Index. Guatemala is supported by facilitated commerce concurrences with the U.S. furthermore, the E.U., its strategic location, natural resources, strong performance in logistics and aspiration to become a regional hub. 

Obstacles to FDI include weakness, absence of a skilled population, low quality infrastructure, weak legal organizations, and regulatory burdens. Financial specialists were likewise careful about a lessening in open venture and the political pressures between the Presidency and the International Commission against Impunity in Guatemala (El Periódico). 

  • Prudent macroeconomic policy structure 
  • Access to international monetary support
  • Trade agreement with the U.S. (DR-CAFTA) 
  • Adequate business condition 
  • Geographical proximity of the USA and Mexico 

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