(29 October 2010) Foreign direct investment (FDI) in Latin America and the Caribbean recovered significantly in 2010 with regard to the drop in 2009 as a result of the global financial crisis.
According to new data released today by ECLAC, FDI to 11 of the region's economies grew 16.4% during the first semester of 2010 in comparison to the same period last year. This increase totaled over US$7 billion, rising from US$43.2 billion in 2009 to US$50.3 billion this year.
Latin American and Caribbean investment abroad grew strongly, jumping from US$5.5 billion in the first semester of 2009 to US$20.8 billion in the same period this year.
Based on these results, ECLAC estimates that FDI will rise moderately in 2010, but will fall short of the record levels seen in 2007 and 2008.
The increase in FDI is due in the first place to the economic stability and growth in most countries of the region. In South America, the high prices of prime materials have continued to encourage FDI flows to mining and hydrocarbons. Added to this are the recovery of world trade and the improved outlook for international financial markets.
FDI flows to Mexico in 2010 showed signs of a significant recovery, as in Chile and Peru. In Central America, FDI to the two main FDI recipients in the subregion -Costa Rica and Panama- also grew with regard to 2009.
During the first semester of 2010, Brazil continued to be the region's prime FDI recipient, with flows reaching US$17.1 billion. This is largely explained by the strong interest in investing in traditional activities and emerging sectors (oil prospecting and ethanol production), as well as loan payments from Brazilian subsidiaries of multinational corporations to company headquarters.
See charts attached:
- Latin America and the Caribbean: Foreign direct investment flows, 2009 and 2010
- Latin America and the Caribbean: Direct investment flows abroad, 2009 and 2010
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