FDI grew by 40.7% in Latin America in 2021, but remains below pre-pandemic levels (Cepal)

Foreign direct investment (FDI) in Latin America grew 40.7 percent in 2021 compared to 2020, to a total of $142,794 million, lower than pre-pandemic levels, the Economic Commission reported Tuesday for Latin America and the Caribbean (ECLAC).

“This weak recovery shows how difficult it is for the region as a whole to reposition itself as an attractive destination for the establishment of new transnational business activities, after the cycle of commodity price booms and (of) high growth rates,” he said explained the ECLAC in a report.

The region is also losing share as a destination for global investments, accounting for 9% of the total, “one of the lowest percentages in the last ten years and far from the 14% recorded in 2013 and 2014”.

“In a region with low general levels of investment, foreign direct investment is crucial for the design of a productive policy,” said ECLAC Executive Secretary José Manuel Salazar-Xirinachs, quoted in the text.

Brazil, with 33% of the total, Mexico (23%), Chile (11%), Colombia (7%), Peru (5%) and Argentina (5%) were the countries that received the most FDI in 2021, a type of productive investment with a long-term impact, as it enables businesses to be created or seeks to grow them.

In addition to Brazil, which always has a high impact due to the size of its economy, the strong growth of FDI in Chile (66%) and Peru (919%) in South America and Guatemala (273%) and Panama (163%) in Central America, it explained most of the year-over-year variation, according to Cepal.

By sector, natural resources, up 62%, and services, up 39%, were the most dynamic, while the top investors came from the European Union and the United States, accounting for 36% respectively. % and 34% of the total. .

Meanwhile, the number of mergers and acquisitions has increased by 33%, but remains “at one of the lowest levels of the decade”.

“Against a global environment where mergers and acquisitions have grown significantly, the region has only recovered from the decline that occurred in 2020,” ECLAC noted.

Multinationals’ interest in acquiring assets in the region has focused on the electricity, gas and water, telecommunications and oil refining sectors, the UN technical body added.

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AFP extension