FDI in Latin America Fell 37% in 2020: UNCTAD

Foreign Direct Investment (FDI) in Latin America and the Caribbean plunged a stunning 37% in 2020, as every country in the region imposed social distancing measures in a bid to contain the COVID-19 pandemic.

With a 55% decrease, Brazil was the worst hit, according to the United Nations’ Conference on Trade and Development (UNCTAD).

Foreign inflows into the country’s transportation and financial services industries fell a record 85% and 70%, respectively. Even the oil & gas extraction and automotive industries registered a 65% decline in inflows.

Among the major economies, Mexico experienced a decline of less than 10%. Foreign direct investment in Peru, Colombia, and Argentina dropped by 76%, 49%, and 47%, respectively.

In Peru, there was “virtually no new investments” in the services, manufacturing, and utility industries, says the UN agency.

In Chile, flows fell by 21% to US$8.9 billion. While there was a little uptick in new investments in the transportation, manufacturing, and trade industries, Chile’s growth did not extend to the second half of the year.

FDI flows to Central America decreased by 14% to an estimated US$38 billion from US$46 billion in 2019. Greenfield project announcements, an indication of future FDI trends, fell 63% to US$28 billion from US$77 billion in 2019.

The report says that the pandemic only exacerbated the crisis already sparked by the low demand for commodities in the international market.

Foreign inflows in Costa Rica plunged 48%, as the pandemic brought its tourism industry to a grinding halt and kept new investors away from its economic zones.

Those Caribbean countries that are heavily dependent on tourism suffered a similar fate. But the Dominican Republic escaped almost unhurt because the island began manufacturing medical devices as the pandemic raged on.