Foreign direct investment (FDI) in Guatemala

FDI in Figures

According to UNCTAD's World Investment Report 2024, Guatemala received USD 1.55 billion in FDI inflows in 2023, up by 7.6% compared to the previous year. At the end of the same period, the FDI stock in Guatemala reached an estimated USD 24 billion, around 23.6% of the country’s GDP. Some of the activities that have attracted the most FDI flows in recent years have been financial and insurance activities, information and communication, trade, and electricity. As per the Ministry of Economy, in 2024, Guatemala attracted a total of USD 1.69 billion in foreign direct investment. The financial and insurance sectors led the way, accounting for 42.6% of the total, reflecting investor confidence in the country’s financial system. They were followed by manufacturing industries with 15.7% and the trade and vehicle repair sector with 14.8%, both of which remained key drivers of growth and employment. In terms of origin, Central America was the main source of investment, contributing 44% of the total, followed by Mexico with 12.86% and the United States with 11.43%, highlighting the importance of regional ties and the North American Free Trade framework. There was also a noticeable trend toward greater geographic diversification, with increasing inflows from Europe, Asia, and other Latin American countries.
The Guatemalan government promotes foreign investment, and investors technically receive equal treatment to national investors, but a variety of regulatory hurdles can serve as a barrier to investment. Guatemala is bolstered by free trade agreements with the U.S. and the E.U., its strategic location, abundant natural resources, a good business environment, strong performance in logistics and tourism, interest in technological development, and aspiration to become a regional hub. There are also five free economic zones in Guatemala, which offer tax incentives to investors. However, obstacles to FDI include insecurity, lack of a highly skilled population, low-quality infrastructure, weak legal institutions, administrative burdens, social and political instability, and severe levels of crime and drug trafficking. The Guatemalan Constitution acknowledges the right to private property and business engagement, and there is no screening process for inbound investment. Foreign private entities are generally permitted to establish, acquire, and transfer various business interests, with few exceptions for certain professional services. According to the Foreign Investment Law, foreign investors are entitled to the same property rights as Guatemalan citizens. However, foreign ownership of land directly bordering rivers, oceans, and international boundaries is prohibited under Guatemalan law. Guatemala ranks 122nd among the 133 economies on the Global Innovation Index 2023 and 71st out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Guatemala

Strong Points

Guatemala’s strong points to attract investment are:

- Prudent macroeconomic policy framework
- Access to international financial support
- Trade agreement with the U.S. (DR-CAFTA)
- Adequate business environment
- Geographical proximity of the United States and Mexico
- Strong potential of tourism, agricultural, mining, hydroelectric and geothermal sectors

Weak Points

Guatemala’s weaknesses impeding FDI are :

- Social and political instability
- Weak infrastructure
- Vulnerability to external shocks (natural disasters and commodity prices)
- Strong dependence on a low value-added industry and the remittance flows of expatriates
- Low tax revenues
- Rural poverty, inequality, underemployment, informality, ethnic cleavages
- Severe levels of crime and drug trafficking.

Government Measures to Motivate or Restrict FDI

The Guatemalan legal structure promotes investment and includes provisions that recognize and protect private property rights for both national and foreign investors. Additionally, Guatemalan law favours foreign investment under the Foreign Investment Law (Ley de Inversión Extranjera-Decree 9-98). 

Foreign investors technically receive national treatment, but a variety of regulatory hurdles can serve as a barrier to investment. Some professional services may be supplied only by local accredited enterprises. Mining activities face additional restrictions as minerals and petroleum are the property of the state.

There exist eight free economic zones in Guatemala, which offer tax inventives to investors. It is also important to note that Guatemala is part of  the  MIGA: Multilateral Investment Guarantee Agency, a branch of the World Bank in charge of promoting and protecting foreign investment. It has also been ratified by the OPIC: Overseas Private Investment Corporation. Guatemala's membership to these types of organizations shows its determination to create a safe and attractive environment to foreign investors.

Bilateral investment conventions signed by Guatemala

Guatemala has signed bilateral conventions on FDI with 21 countries. To find out more, please visit the investment policy hub website of the UNCTAD.