While Guatemala’s consistent economic growth was slowed by the outbreak of Covid-19 in 2020, the country experienced one of the smallest contractions in GDP in Latin America and the Caribbean, assisted by the stimulus package swiftly introduced by President Alejandro Giammattei’s government. It has since seen a strong recovery, with GDP increasing by 8% in 2021 and estimated to grow by 3.4% in 2022, according to figures from the World Bank. The largest economy in Central America, Guatemala is also highly reliant on remittances, particularly from the estimated 2.9 million Guatemalans living in the US, which reached a record $15bn in 2021.

Contrary to concerns that worldwide geopolitics would affect the Guatemalan corporate market, M&A activity has continued to pick up and firms have found themselves advising on increasingly high-value transactions. Over the last few years, the market has seen a shift from the sale of local companies to larger businesses operating abroad, to the reverse situation, with major US and European clients acquiring domestic companies in order to expand their operations in the region.

At the same time, Guatemalan companies have begun moving from traditional family-owned structures to more sophisticated structures, a move that has been key in attracting further foreign direct investment.

The pandemic has also induced a number of new trends (both in Guatemala and in Central America more generally), including an uptick in technology-driven companies. This has generated new transactional work for firms, particularly fintech and payment platform-related matters. Transactions in the logistics, transportation and healthcare sectors have also increased.

In both the corporate and financial spheres, environmental, social and governance (ESG) matters have become increasingly important; firms have seen a rise in clients seeking advice on sustainable finance as well as ESG-related regulatory and corporate governance issues. In addition, multilateral agencies have been increasingly active in the region, allowing firms to take on more work for these clients.

Recent legislative changes are also likely to lead to an increase in activity for Guatemalan firms. In November 2021, Congress enacted Decree 18-2021, approving the country’s first public-private partnership agreement for the development of the Escuintla-Puerto Quetzal national highway as a toll road. This, firms hope, will lead to more essential infrastructure projects and increased demand for advice. A further notable law change took place in February 2022, when Congress approved a new insolvency law intended to focus on restructuring and the continuity of businesses and to avoid liquidations. This is likely to lead to an increase in corporate and dispute resolution issues in the market.

In the dispute resolution arena, while litigation remains more common, the closure of the judicial system during the Covid-19 pandemic led many clients to turn to arbitration and this is now becoming an increasingly popular choice. On the tax side, disputes with the Superintendence of Tax Administration (SAT) have decreased as the SAT leadership has continued to take a less aggressive approach, but demand for advice on tax compliance has increased. A new bill on the taxation of cross-border e-commerce in Guatemala, filed before Congress in February 2022, is also likely to have an impact on tax practices.

Guatemala’s legal landscape has remained relatively unchanged through 2022. The market is home to a number of regional firms, including Arias, BLP, Consortium Legal, Aguilar Castillo Love, Sfera Legal, EY Law Central America, Central Law, LatamLex | Skinner-Klée & Asociados and Mayora & Mayora, S.C., as well as Alta QIL+4 Abogados following its 2021 merger with firms in Honduras, El Salvador and Costa Rica. Global firms Dentons Muñoz and ECIJA Integrum also continue to consolidate their presence in Guatemala.

The trio of full-service domestic firms Legalsa, Carrillo & Asociados and A. D. Sosa & Soto, are also key players in the market. A small number of domestic boutique firms also stand out: Viteri & Viteri and Palacios & Asociados/Sercomi in intellectual property, and labour law specialist Valenzuela Herrera & Asociados.