Trade relations between Guatemala and the United States have been consolidated over the past 20 years and the balance shows positive growth in the exchange of goods and services. This reiterates the dependence of the Guatemalan economy on this partner country.
It was on August 5, 2004, when the Free Trade Agreement (FTA) between the United States and Central America was signed in Washington DC, 20 years ago.
CONTENT FOR SUBSCRIBERS
Now, there is a relevance to the commercial relationship, since next November there will be presidential elections in the United States and at the moment expectations point to the fact that business, investment, tourism and commercial exchange relations will continue.
Dollar zone
During the forum “20th anniversary of DR-CAFTA and the elections in the United States”, which was recently held by the Guatemalan-American Chamber of Commerce (AmCham), the commercial relations between both trading partners were reiterated, as well as the path that has been taken in these 20 years, where extra-commercial interventions have occurred, such as the economic crisis of 2008 in the United States, and in 2020 with the negative effects on the different variables that arose due to the health emergency.
Despite these circumstances, the US remains Guatemala’s main trading partner in terms of exports and imports, and the figures show linear growth.
For context, the Central American region is considered a “dollar zone” given the trade flows that move in both directions. The political perspective was also addressed at the Amcham forum, and one of the conclusions is that there will be no change to the current trade rules, but at some point a due review will have to be made.
Count
Although the FTA was signed in 2004 as economic blocks, for Guatemala the agreement came into force in 2006, after the ratification process.
During the forum, the growth figures obtained in trade with the liberalization of tariff items were presented, which in general, already allows free access to goods.
By 2004, Guatemala’s exports to the United States reached US$2.66 billion, and by the end of 2023 they stood at US$4.369 billion, equivalent to a growth of 64.2% in that period.
CONTENT FOR SUBSCRIBERS
As of May, exports stood at US$2.056 billion, showing greater dynamism for this year, and which is closely linked to U.S. demand, consumption and economic activity.
Regarding imports, in 2004 they were US$3,674 million and by 2023 they were US$10,190 million, so there is a growth rate of 177% during this analysis period.
This means that Guatemala buys more from the United States than it sells to it annually.
What is exchanged?
According to the most recent figures from May, these are the five most important Guatemalan products in terms of sales:
- Clothing items: US$562 million
- Banana: US$353 million
- Fresh and frozen fruits: US$222 million
- Coffee: US$203 million
- Legumes and vegetables: US$87 million
The top five products that Guatemala acquires from the United States are:
- Gasoline: US$837 million
- Diesel: US$730 million
- Electromechanical machinery and equipment: US$388 million
- Plastic materials and their manufactures: US$192 million
- Corn: US$168 million
What is the reading?
During the Economic Outlook for Guatemala and the United States panel, Johny Gramajo Marroquín, Economic Manager of the Bank of Guatemala (Banguat), stated that the US economy would be growing by 2.7% in 2024 and by 1.9% in 2025, and growth for Guatemala is also included with a scenario of 3.5% for this year and 3.7% for next year.
As for what may happen with the election results in the US, in both cases, the fiscal issue – in that country – will continue to be a challenge, since the fiscal deficit would be increasing.
CONTENT FOR SUBSCRIBERS
A downward scenario in US economic growth would have an impact on Guatemala’s exports, especially in the textile sector, while the rest of the exports would remain solid, since they are raw materials.
He recalled that exports fell last year and for 2024 there is a recovery that is already entering positive territory, and as for family remittances, they have grown in double digits for several consecutive years, after the pandemic.
For Fernando Ocampo, principal sector specialist of the Trade and Investment Division of the Inter-American Development Bank (IDB) office, Guatemala has great opportunities in the nearshoring to attract more US investments in strategic sectors where it has a qualified workforce.
Strategic partner
Fernando Samayoa Delgado, president of the Guatemalan Banking Association (ABG), reiterated that everything done in the U.S., from a commercial point of view, is important because it is the main commercial partner in terms of exports, imports and of Guatemalans residing in a country abroad.
“What will happen in the elections is very important and I hope that positive agreements can be reached in the United States. In Guatemala we have a lot in common regarding our visions of society, growth, development, and in that sense there are very favorable issues for being commercial partners,” he said.
He added that the United States is a strategic partner of Guatemala, not because of the size of the country, but because of its proximity and what it represents.
#years #FTA #expectations #Guatemalas #trade #remain #encouraging
