Thanks to a drop in commodity prices and the slowing Chinese economy, foreign investment in Latin America hit a sharp decline in 2014. The top 10 regional economies all saw a decrease in FDI in 2014 except for Panama, says fDi Markets, a research unit of British business daily The Financial Times.
The region’s major economies, Mexico and Brazil, captured the lion’s share of investment into the region; together they accounted for 56% of capital investment.
But the Brazilian economy dipped into recession, while Mexico grew moderately. When it comes to inward investment, Mexico is far ahead of all other countries in the region.
Thanks to its growing manufacturing sector and a string of policy reforms, Mexico was the leading location for FDI from North America, with the country attracting US$16 billion last year.
“Mexico also led for number of projects attracted, at 365, but this was a 15 per cent decline on the previous year’s figure,” the report added.
Foreign investment declined considerably in Brazil and Colombia. There was a 41% drop in FDI in Colombia, while most of the region’s smaller countries, except Panama, are finding it extremely difficult to attract foreign investment, the report said.
Panama was the only country among among the top 10 regional economies to witness a growth in number of FDI projects, with a 19% increase. With the expansion of the Panama Canal underway, analysts expect the country to see more foreign investment in the years to come.
Panama has spent $5.3 billion on widening the canal so that it can handle ships three times bigger than the ones it handled before.
The fDi Markets predicts that Panama’s economy will continue to grow by about 7% this year.