Guatemala

In-depth country-focused analysis on Guatemala's economic, political and operational risk environment, complemented by detailed sector insight

Guatemala

Our comprehensive assessment of Guatemala's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Guatemala, as well as the latest industry developments that could impact Guatemala's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Guatemala before your competitors.

Country Risk

Guatemala Country Risk

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Core Views

  • Belize will post slower growth rates over the next decade than over the previous 20 years, underpinned by our expectation that productivity gains will remain limited. Furthermore, the government will be unable to pursue much-needed reforms in infrastructure and education due to a lack of available funding, further dampening Belize's long-term growth prospects.

  • Belize's current account deficit will remain substantial over the 10-year forecast period due to declining oil production and weakening export growth.

  • Public debt sustainability will remain precarious over the next several years, as Belize's debt load continues to grow. A rising debt burden, combined with a history of defaults, will drive up financing costs and increase rollover risk in the country.

  • Belize will...

Guatemala Country Risk

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External Tailwinds Supporting Regional Underperformers

Core View

Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook - a situation which is only exacerbated by the fragmented political environment.

In contrast, our short-term outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their manufactured goods, rising remittance inflows and lower oil prices in the...

Guatemala Industry Coverage (10)

Agribusiness

Guatemala Agribusiness

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BMI View: We believe that Central America's agribusiness industry will continue to grow - albeit inconsistently across sectors - through to the end of our forecast period in 2020. Along the way, the different sectors of the market will be forced to grapple with an array of headwinds that will directly impact output growth across some countries in the region. As a result of rising incomes and growing populations, as well as an improving real GDP outlook for the region, we expect consumption output to outstrip supply in the livestock sector. Future risks for the agribusiness market include disease (predominantly coffee rust disease, or roya) and the potential impact...

Autos

Guatemala Autos

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BMI View: The outlook for the autos industry in Central America in 2016 is modest, and significantly less positive than in preceding years. Sales will be kept positive by rising private consumption rates due to remittance inflows and a low inflationary environment, but will be tempered by a poor business environment and weaker growth in the construction sector, which is slowing economic growth.

Central America - Fleet Size
Historical Data And Forecasts, 2014-2020 (units)
...

Food & Drink

Guatemala Food & Drink

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BMI View: Our consumer outlook for the region has brightened in recent quarters, as households benefit from low oil prices (which fuel their real purchasing power) and rising remittances flows from the US. Guatemala and Honduras, which have traditionally been vulnerable to structural macroeconomic weaknesses, will be the outperformers. Rising incomes will fuel growth in the food and drink sector, and the region will look increasingly attractive for food manufacturers as the rest of Latin America experiences a deteriorating consumer outlook and market saturation in the food sector. Thanks to its large and young consumer base, Guatemala will offer the strongest growth opportunities in Central America, while a strong tourism sector will drive premiumisation in Costa Rica.

Headline Industry Data (regional averages)

  • 2015 food consumption (US...

Infrastructure

Guatemala Infrastructure

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BMI View: We forecast an average of 2.1% real growth for the six construction industries of Central America in 2016. The decline from our forecast for 2015 - 4.4% - is mainly due to a steep drop-off in Panama as it concludes expansion of the Panama Canal and a normalisation of a housing boom in Nicaragua. The region will still offer significant opportunities: the transport sector will see strong growth as development funds target regional...

Guatemala Infrastructure

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BMI View: Guatemala's infrastructure industry will slow in 2016 as the fallout from the corruption scandal surrounding former president Otto Perez Molina continues to weigh on public sector capacity and investor sentiment. Growth will remain muted in 2017 as the new president, Jimmy Morales, lacks the experience and political support to quickly pass reforms.

Latest Updates

  • Corruption and the political uncertainty surrounding the departure of Perez Molina will continue to weigh on construction industry growth.

  • We expect growth to slow to 1.8% in real terms in 2016, and remain muted in 2017, before beginning a slow recovery.

  • Much-needed reforms will not be implemented quickly as the new president, Jimmy Morales, lacks the legislative support and political...

Insurance

Guatemala Insurance

BMI View:

BMI View: Central America's insurance markets differ significantly in many ways from one another, in terms of scale, development, competition and product composition. Growth rates vary, although most outperform more developed markets despite ongoing structural issues and currency weakness in much of the region. Consolidation would bolster development in many markets, as would innovation in low-cost products, including microinsurance which has a limited presence in Central America.

BMI expects Central American insurance markets to continue to grow rapidly in the coming years. Annual growth rates outside Nicaragua, the region's underperformer, will consistently hit high single-digit rates, with some sectors consistently posting growth rates in excess of 10%. We highlight Costa Rica and El Salvador as markets...

Guatemala Insurance

BMI View:

BMI View: Growth will slow from recent double-digit rates to a more sustainable 7-8% over the five years to 2020. The life sector is set to outperform the non-life market, but health insurance will be the big winner in the industry overall, driven in part by inadequate public health provisions. Non-life premiums are set to reach USD1bn by 2020. Competition is high, with the fragmentation in the market hampering the profitability and scale that would allow the market to grow faster, although low incomes also harm the sector's prospects.

Headline Insurance Forecasts (Guatemala 2013-2020)
2013 2014 ...

Pharmaceuticals & Healthcare

Guatemala Pharmaceuticals & Healthcare

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BMI View: Legislative and regulatory improvements to the Central American healthcare system will further strengthen sector coordination, enhancing medical efficiencies and treatments over the long-term. The region's ageing population and dependence on pharmaceutical imports will increase foreign investment appeal as public health provision grows.

Headline Expenditure Projections

  • Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +4.6%. Our forecast has been maintained since Q115.

  • Healthcare: USD16.5bn in 2014 to...

Guatemala Pharmaceuticals & Healthcare

BMI View:

BMI View: The commercial incentives for foreign drugmakers to further expand in Guatemala's pharmaceutical market are limited by the country's low per capita pharmaceutical spending and subdued market growth. However, in spite of this, the country will continue to attract investment as a regional pharmaceutical production hub. Since the end of the 36-year civil war in 1996, Guatemala's political stability has been progressing and tax incentives are available to encourage foreign investment. The key risks to our projection are high levels of bureaucracy, corruption, the complex judicial system and low security due to non-political violence.

Headline Expenditure Projections

Pharmaceuticals: GTQ6.6bn (USD866mn) in 2015 to GTQ7.1bn (USD917mn) in 2015; +7.1% in local currency terms and +5.9% in US dollar...

Telecommunications

Guatemala Telecommunications

BMI View:

BMI View: Number portability will encourage increased competition as four out of eight Central American countries have introduced it already. For further competition to be increased, the progress of this depends on national commitments of these countries. We anticipate slower growth in the mobile sector across the board with Nicaragua offering real potential. Nicaragua offers real growth potential whereas increasing government meddling, as in the case of Guatemala is a worrisome development. Data-driven 3G/4G services have true potential for growth as the large operators are investing heavily into new infrastructure and technologies for such technological uptakes.

Key Data

  • Number porting in Panama increased 37.4% in 2014, highlighting that the population is increasingly more willing to take advantage of better available deals as they...

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