AGEXPORT NEWS

A recent study made by AGEXPORT revealed that despite the fact that Guatemalan exports will decrease in 2020, the impact with not be higher than -10% as the more than 4,000 goods and services exported by Guatemala reacted differently to the COVID-19 crisis. The methodology implemented for this study involved both a quantitative analysis, as well as trends and interviews with businesses to validate the data analysis.

We drafted and presented a proposal to the government authorities to guarantee salaries and income of Guatemalans during the COVID-19 crisis, as well as alternatives to guarantee business continuity during this period. This proposal consists of four phases: 1. Survival actions; 2. Going “back to normal” (June 2020); 3. Recovery (second semester of 2020); and 4. Growth period (2021). We are in constant communication with our member companies to identify their needs during this period, which, at this moment, are related with access to financial alternatives; said Mr. Amador Carballido, AGEXPORT’s CEO.

AGEXPORT’s Competitiveness Department prepared an analysis of the impact of COVID-19 on exporting firms. During the first quarter of 2020, Guatemala was on an economic uptrend, reduced the impact that Guatemalan firms will face in 2020 due to the pandemic. Furthermore, Guatemala will experience a lower recession in 2020 compared with the rest of Central America. Economic growth forecasts for Guatemala are of -2% for 2020, while the Central American average is of -3.94%.

Exports will suffer a decrease as well, but we estimate it of no more than -10%, as goods and services are reacting in different ways during this emergency. We found that different exporting sectors, such as services, are currently supporting business to continue operations, with services such as technology firms developing different delivery apps. Industries like food and beverages, chemicals, detergents, soaps and essential oils are currently experiencing growth rates of up-to 150% on their local and international sales; said Mr. Jose Chavez, Analyst of AGEXPORT’s Competitiveness Department.

On the other hand, contact centers & BPOs are currently operating on “home office” modes, providing services for government institutions, banking, insurance, medical services and fast food chains that are available 24/7.

Among the different scenarios that we developed, we have an estimation of a 7.5% decrease in exports for 2020, which would translate to total exports for US$10.3 billion. For services, we estimate a 23.6% decrease (US$2.8 billion). The negative impact for 2020 will be different for each good and service, and so will be the recovery expected for 2021. The ones that have the best expectations for 2021 are tradable goods and services focused to guarantee business operations. Products like furniture, though, will be more severely impacted as consumption patterns are currently changing. During this crisis, customers will focus on “value for money” and avoid premium goods and services as these will not be a priority; said Mr. Chavez.

Based on this analysis and with the objective of providing information and alternatives for Guatemalan exporters to shift their strategies and recover from this crisis; AGEXPORT’s Market Development and Trade Promotion Department published a study on the consumption trends that will follow the COVID-19 crisis.

How to take advantage of the “new normal”? This was the question that based the analysis, trying to identify new consumption patterns, behaviors and buying decisions. Mainly, consumers are now prioritizing hygiene, security, traceability, online shopping and social distancing. Consumers are also focusing on only basic products and reducing budget for non-essential products and services.

Overall, we identified four clear trends: first, technology. Baby boomers are now learning to do online shopping and online payments. Second, no-touch pay, safe electronic payments from mobile devises. Third, online shopping due to the social distancing restrictions and preference of consumers of avoiding human contact. Lastly, fast delivery: purchases made from mobile devices which are expected to be delivered on a short period of time; said Mrs. Paola Álvarez, manager of AGEXPORT’s Market Development and Trade Promotion department.

Mrs. Álvarez also remarked that Guatemala’s economic recovery will consider three phases: 1. Incorporation of a scenario focused on the demand of basic food products; 2. Internalizing a business scenario where companies will need to adapt to changes such as a Christmas period with higher online purchases and more social distancing; 3. A recovery for tourism companies, needing to obtain new certifications and travel alternatives in order to win customers.

AGEXPORT identified six alternatives to re-invent Guatemalan exporters: 1. Keeping a diversified portfolio of goods and services, and promoting a constant transformation of this portfolio; 2. Managing a large network of international contacts; 3. Receiving constant feedback from customers and suppliers; 4. Keeping a systemic mindset and be ready to expand knowledge; 5. Participation from the labor force on transformation processes; and 6. Establishing a governance system.

One of the industries that has been impacted the most with the current crisis is tourism. For these companies, we identified trends focused on offering clients unique experiences with the usage of technology. Innovative tools such as tourism marketing with 3D technology, as well as increasing trust of clients by publishing all protocols implemented to guarantee safety of clients. Displaying all certifications, alliances, innovations and other actions focusing on the client will be key as well. Lastly, focusing on tailored experiences when developing new products and services will benefit this industry; said Mrs. Álvarez.