Latin America and Caribbean FDI reaches US$208bn

Foreign direct investment in Latin America and the Caribbean increased 51% last year to US$208bn, mainly on higher demand for commodities and critical minerals and due to nearshoring.

"Since the beginning of the COVID-19 pandemic and then the invasion of Ukraine by Russia, we have seen a movement towards the repositioning of global chains and Latin America is benefitting because of its proximity to the US," Luciano Rostagno, chief Latin America strategist at Banco Mizuho do Brasil, told BNamericas.

"High commodity prices pushed up reinvested earnings of foreign affiliates in extractive industries," a report by the UN Conference on Trade and Development (UNCTAD) said.

Rostagno, however, highlighted that “many international companies remit funds to their units in the region in the form of investments. But in practice, these resources go to … fixed income markers, with those firms trying to capture gains due to high interest rates in various countries of the region.”

Brazil is the only country in the region that is among the top 10 FDI receivers globally, occupying fifth place. Number one is the US, followed by China, Singapore and Hong Kong. 

Global FDI flows fell 12% last year, totaling US$1.3tn. UNCTAD projects another reduction for this year amid economic challenges in industrialized countries.

In Brazil, FDI reached US$86bn, the second highest value ever recorded, increasing from US$51bn in 2021.

"The number of announced greenfield projects and international project finance deals rose by almost 30%, to 242 and 138, respectively. The country ranked fifth worldwide by number of international project finance deals," UNCTAD said.

Large projects included the construction of a US$3bn palm mill by Empresas Copec and the US$2.3bn Rio-Valadares highwayconcession for Ecorodovias and its Italian shareholder.

Flows to Mexico increased by 12% to US$35bn, with a rise in new equity investment and reinvested earnings. Mexico registered the second highest FDI flows in the region.

"A large deal was the acquisition by Univision Communications (United States) of the media, content and production assets of Grupo Televisa for US$4.8bn. The value of announced greenfield investment more than doubled to US$41bn. Tesla (United States) is planning to invest US$5bn in a plant in Mexico," according to the report. 

FDI in Chile reached US$20bn, up from US$13bn.

Chile ranks third globally in attracting renewable energy FDI between 2015 and 2022, with Brazil being number one. 

Meanwhile, FDI to Colombia grew 82% to US$17bn, led by mining, construction finance and transport, logistics and communication services. Argentina and Peru registered U$15bn and US$12bn, respectively, double the 2021 figures.