The Foreign Direct Investments (FDI) flows to Latin America and the Caribbean increased by 8% in 2017 to $151 billion, according to the World Investment Report 2018 which was issued by the United Nations Conference on Trade and Development.
This was the first rise in six years, although inflows remained well below the peak reached in 2011 during the commodity boom. Outflows from the region bounced back 86 per cent to $17.3 billion in 2017 as Latin American MNEs resumed their international investment activity.
FDI to South America increased by 10% as recessions in two leading economies, Argentina and Brazil, ended. FDI to Brazil increased by 8% to $63 billion supported by a significant influx in the energy sector.
In Argentina flows more than trebled, to $12 billion, on the back of the economic recovery and new policies to attract investment and upgrade infrastructure.
Investment in Colombia increased by 5% to $14.5 billion, supported by the year-end recovery in oil prices, infrastructure investment and rising domestic demand. Investments in Central America grew marginally to $42 billion. Despite uncertainty about the outcome of the renegotiation of the North American Free Trade Agreement, inflows to Mexico remained stable at $30 billion, supported by record-high investments into the automotive industry.
FDI in the Caribbean subregion grew to $5 billion, driven by flows to the Dominican Republic, up by 48% to $3.6 billion, bolstered by booming investment in trade activities and positive flows to telecommunication and energy industries. Investment flows to Latin America and the Caribbean are expected to remain stagnant or decline marginally, at about $140 billion. Economic growth in the region is expected to remain tepid, challenged by many downside risks, including economic and policy uncertainty associated with upcoming elections in some of the largest economies, and possible negative spillovers from international financial market disruptions