The political system is characterized by the absence of ideologically based parties that are very volatile and are grouped around a circumstantial leader. This situation is aggravated by the high levels of insecurity, violence and impunity, which limit the normal functioning of State institutions. There are also important public safety problems.
Guatemala's foreign policy is highly conditioned by its proximity to the United States and integration into the Central American Integration System. The commercial opening of the Guatemalan market has been improving in recent years.
Economic relations with Spain
The tariffs for the entry of European products and non-tariff barriers have been reduced thanks to the EU-Central America Association Agreement in force since December 2013. Spain is the fifth investor country in Guatemala and the first European, accounting for a total of 32 million dollars in 2018. It is also the most prominent exporter in Europe.
In Guatemala there are about 150 Spanish companies established through branches, subsidiaries or franchises in sectors such as telecommunications, services and energy. The projects announced by the Government of this country to improve and expand their infrastructure offer investment opportunities to foreign companies in this sector through public-private partnerships.
On a commercial level, the EU-Central America Association Agreement signed in 2013 has contributed significantly to increasing bilateral exchanges. In this way, Spanish exports increased by 40% in 2014 and have remained similar levels in the following years. Trade between Spain and Guatemala reached an economic volume equivalent to 369 million euros in 2018.
Exports reached 206 million euros in that year, while imports stood at 163 million euros. The products most exported by Spain are food, pharmaceutical, machinery, clothing and footwear, electrical equipment and cosmetics. Imports focus on vegetable fats, seafood and preserves, sugars, coffee and tea, clothing and fruits.
Participation in international cooperation projects also constitutes a significant part of bilateral relations. In the period 1990-2013, the annual average of resources contributed by Spain in this concept was 52 million dollars, being the second donor country after the United States.
Business opportunities in Guatemala
Infrastructure construction is one of the sectors that offers the greatest opportunities for Spanish companies. The Guatemalan Government has undertaken projects to boost the national economy by modernizing the endowments and transport, energy and telecommunications networks, as well as developing other economic centers outside the capital. There is a special interest in strengthening the main ports of the Pacific and the Atlantic to facilitate the entry and exit of products to foreign markets. The execution of these projects will require construction materials and equipment.
Other sectors of interest are agriculture and agri-food, in which machinery and capital goods have good business opportunities, including food processing; and the tourist, with wide possibilities for the natural attractions of the country and its incipient hotel industry.
Opportunities also include sectors such as engineering and consulting, equipment for water and waste treatment, the implementation of renewable energy and energy efficiency systems, as well as the export of textile and clothing and footwear consumer goods, food products and wine.
On the other hand, the fact that Guatemala signed a free trade agreement with the United States in 2005 makes this country a good platform to access the North American market, especially in labor-intensive manufacturing sectors and assembly industries.
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