FDI arrivals in Latin America fall 37% in 2020

FDI in Latin America and the Caribbean declined 37% in 2020, to an estimated $ 101 billion, amid one of the deepest recessions in the developing world, UNCTAD projected.

Investments in oil-related industries and market research flows recorded sharp declines.

Among the largest economies, only Mexico saw a decline of less than 10%, thanks to resilient reinvested earnings.

In South America, flows fell 46%, to an estimated $ 60 billion, as all major receivers posted sharp contractions.

In Brazil, FDI decreased to $ 33 billion, as the privatization program and infrastructure concessions stopped during the pandemic crisis.

The most affected industries were transportation and financial services, with declines in inflows of more than 85 and 70%, respectively, and the oil and gas extraction and automotive industries that registered a preliminary decrease of 65% in inflows.

For their part, FDI flows to Peru, Colombia and Argentina fell 76, 49 and 47% respectively.

In Peru, all sectors recorded sharp falls in flows with practically no new investment in the service, manufacturing, and utilities industries.

The mining sector recorded a milder decline, sustained by reinvested earnings.

FDI

In Argentina, the health crisis exacerbated an already complicated economic situation with a sovereign debt default in May.

In turn, in Chile, flows fell 21%, to 8.9 billion dollars; an increase in new investment in the first quarter in the manufacturing, transportation and commerce industries was undone in the second part of the year.

Flows to Central America contracted by 14%, to an estimated $ 38 billion.

FDI to Mexico decreased by 8%, to $ 31 billion. The automotive industry was particularly affected by the pandemic, which registered a drop in flows (-44 percent).

The sale of a 40% stake in the Mexican construction company IDEAL to a Canadian consortium for 2,600 million generated an increase in the services sector.

In Costa Rica, FDI decreased by 48%, to $ 1.3 billion with the fall in flows to the tourism industry and special economic zones.

In the Caribbean, flows decreased by 18%, to $ 3.2 billion, significantly affected by the reduction in investment in the tourism industry.

In the Dominican Republic, although total inflows fell 9%, investments in manufacturing increased, supported by new projects in medical devices.