APRIL 2025
Assessing Guatemala as a
Nearshoring Destination
By Christopher Hernandez-Roy, Andrea Casique, and Natalia Hidalgo
Introduction
Guatemala’s geographic proximity to the United States and Mexico gives it an advantage when trying
to lure North American businesses seeking to shorten and strengthen their supply chain routes. The
country, which has the United States as its largest trading partner, has the potential to leverage the
nearshoring movement and attract businesses seeking alternative hubs to Mexico, especially as the
Guatemalan government continues to make eorts to enhance its competitiveness, promote investment
opportunities, and work on reforms to support economic growth.
Although it will not replace its northern neighbor’s established presence in the nearshoring movement,
Guatemala is attracting foreign direct investment (FDI). Guatemala has the largest economy in Central
America (its GDP in 2023 was greater than 11 individual U.S. states), with consistent growth above the
regional average driven by a robust private sector. More than 200 U.S. and other foreign rms have
active investments in Guatemala, benetting from the U.S. Dominican Republic-Central America Free
Trade Agreement (CAFTADR), under which the United States has a trade surplus with Guatemala.
Investor concerns about Mexico’s judicial reform and the country’s process of electing judges
by popular vote raise questions regarding the country’s rule of law. This, in addition to the Trump
administration’s 20 percent taris on China and threatened 25 percent taris on Mexico, means
Guatemala has the largest economy in Central America (its
GDP in 2023 was greater than 11 individual U.S. states), with
consistent growth above the regional average driven by a robust
private sector.
