Caribbean & Central America - April 2011 (ISSN 1741-4458)

Despite ongoing concern about the impact of the regional security crisis on investment in Central America (see page 10) Guatemala's Superintendencia de Bancos released a survey last month showing optimism on the part of Guatemala's main companies. In the survey, 53% of respondents expected an increase in investment this year; 47% reported an increase in sales last year; and 69% expected sales to rise again this year. This show of confidence is striking given the private sector - and the traditional business elite in particular - has been a major thorn in the side of Colom and his efforts to implement tax reform.
    Confidence in Guatemala's business climate was further suggested in the 7 April announcement by Wal-Mart Mexico y Centroamérica, of plans to open a further 25 retail outlets in Guatemala, an investment worth US$83.7m. Wal-mart, the largest retailer in Central America, has been active in Guatemala since September 2005, when it acquired a 33% stake in CARHCO, from the Dutch retailer Royal Ahold NV. It currently has 176 retail outlets in Guatemala. Wal-mart's investment follows the move last August by Switzerland's Nestlé, the world's largest food company, to acquire a majority stake in the Guatemalan food company Malher. According to Guatemala's central bank (Banguat), foreign direct investment (FDI) rose 18% year-on-year in 2010 to US$709.5m. Banguat is forecasting a further 11% increase this year, driven by the energy, mining, telecommunications and oil sectors.

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