Nearshore Americas

LATAM FDI Grew 40%; Remains Short of Pre-COVID Levels

Latin America and the Caribbean (LAC) received US$142 billion in foreign direct investment (FDI) in 2021, a 40.7% increase from 2020. Nevertheless, the jump wasn’t enough to bring foreign investment to pre-pandemic levels.

Global FDI inflows rose 64% in 2021 to around US$1.6 trillion. LAC’s share fell to 9% of the total, one of the lowest percentages in the past decade and well below the 14% recorded in 2013 and 2014, according to the UN regional agency ECLAC.

At 33%, Brazil accounted for more than a quarter of the region’s FDI inflows, followed by Mexico (23%), Chile (11%), Colombia (7%), Peru (5%) and Argentina (5%).

In Central America, Panama showed strong signs of FDI growth. Guatemala had a strong performance, largely due to M&A activity in the telecom sector. Costa Rica remained as the regional leader, being the largest investment recipient for the second year straight.

Thanks to its bulging oil wealth, Guyana edged out the Dominican Republic to claim the position as the Caribbean’s largest recipient.

Across LAC, foreign money flowed primarily into the services and natural resources sectors, with both segments registering 39% and 62% growth, respectively.

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Over 70% of FDI inflows came from the European Union and the United States, according to the ECLAC document.

M&A activity was at its lowest. The 20 largest deals were valued at US$18 billion, taking place in Brazil, Chile, Colombia, Guatemala and Mexico.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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