Foreign direct investment recovers for Latin America

Foreign direct investment 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 by the Economic Commission for Latin America and the Caribbean, direct investment to 11 of the region’s economies grew 16.4 percent during the first semester of 2010 in comparison to the same period last year. This increase totaled over $7 billion, rising from $43.2 billion in 2009 to $50.3 billion this year.

Latin American and Caribbean investment abroad grew strongly, jumping from $5.5 billion in the first semester of 2009 to $20.8 billion in the same period this year, the commission said.

Based on these results, the commission said it estimates that foreign direct investment will rise moderately in 2010, but will fall short of the record levels seen in 2007 and 2008.

The increase in foreign direct investment 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 investment flows to mining and hydrocarbons. Added to this are the recovery of world trade and the improved outlook for international financial markets, the commission said.

Foreign direct investment to Mexico in 2010 showed signs of a significant recovery, as in Chile and Peru. In Central America, investments to the two main 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 foreign direct investment recipient, with flows reaching $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.

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