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AmericasMarch 5 2007

Infrastructure insufficiency

Guatemala’s poor infrastructure puts off investors and makes the country less able to fully profit from free-trade deals. Monica Campbell explains why, with elections looming, little change is likely for the time being.
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Guatemala may be Central America’s largest economy, but it remains vulnerable to any downturn in the US economy and is facing growing competition from the likes of China and India. This, combined with the ongoing threat of tropical storms and the problem of poor land management of key crops, means that the trade outlook remains far from upbeat.

Last year, Guatemala’s economy grew a respectable 4%, mostly thanks to improving US demand. Any weakening in that demand could test the strength of Guatemala’s economy and affect its export performance of key products such as coffee, bananas and textiles. Indeed, even the slightest ripple in the US can have a lasting knock-on effect in Guatemala (along with every other Central American economy).

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