Foreign Direct Investment In Latin America Unable To Reach The Pre-Pandemic Level

According to a statement released by the Economic Commission for Latin America and the Caribbean (Cepal) on Nov. 29, foreign direct investment (FDI) increased by 40.7% in Latin America and the Caribbean in 2021 compared to 2020, totaling 142.794 million dollars. However, this growth was insufficient to return to pre-pandemic levels, said reports.

"In a region with low general levels of investment, direct foreign investment is essential for the design of a productive policy," said the executive secretary of ECLAC, José Manuel Salazar-Xirinachs.

Despite the fact that amounts of global FDI increased by 64% in 2021, reaching approximately 1.6 trillion dollars, the region " lost share as a destination for global investments, representing 9% of the total, one of the lowest percentages of the last ten years and far from the 14% registered in 2013 and 2014", says ECLAC in its annual report " Foreign Direct Investment in Latin America and the Caribbean 2022".

The report states that all subregions had a reactivation of investments in 2021. Brazil (33% of the total), Mexico (23%), Chile (11%), Colombia (7%), Peru (5%), and Argentina (5%) were the nations that received the largest amounts of FDI.

For the second year in a row, Costa Rica was positioned as the primary receiver of the subregion in Central America. In the Caribbean, Guyana was the country that presented the highest growth in amount, surpassing the Dominican Republic, which in previous years had led the reception of investments in this subregion.

According to the report, the two sectors with the greatest growth were services and natural resources, which saw rises of 39% and 62%, respectively. In the manufacturing sector, the drop in FDI inflows in 2021 (-14%) was explained by the decrease in investment in Brazil.

The European Union and the US were the main investors in 2021.

" Telecommunications and renewable energies remained the sectors that arouse the greatest interest from foreign investors to carry out new projects; however, the announcements of new investment projects did not pick up in 2021 and are at their lowest point since 2007," adds the agency.

The number of mergers and acquisitions in the region increased (33% in 2021), but remains among the lowest of the decade. The 20 largest operations in Brazil, Chile, Colombia, Guatemala, and Mexico totaled 18 billion dollars.