« »

Wednesday, June 4, 2014

Latin America receives record foreign investment

Latin American foreign direct investment
Foreign Direct Investment helps boost national GDP
By Bradley Shore

Latin America and the Caribbean have experienced a significant boom in foreign direct investment, with just under $185 billion poured into the region last year, an all-time record, the UN stated on Thursday.

The biggest beneficiaries of the surge in foreign investment were Brazil and Mexico, with region-wide figures up 5 per cent year on year until Q4 2013, the Economic Commission for Latin America and the Caribbean (ECLAC) said.

China are one of the main countries that have pushed their investment in Latin America, with a massive 13 per cent ($11.4bn) of their total foreign investments, invested in the region. According to Boston University, in the 8 years, between 2005 and 2013, China has invested $102.2 billion in the region, with an average of $12.8 billion per year. The majority of China’s Latin American investments have been pumped into deepwater oil projects such as Brazil’s offshore ‘Libra’ site, estimated to hold over 12 billion barrels of oil.

Another country keen to jump on the Latin American foreign investment train is Israel, whose government approved a three-year NIS 50 million plan to strengthen its economic ties with at least five Latin American countries, meant to help Israel reduce its dependency on Europe as its primary trading partner. 

Israeli Prime Minister Binyamin Netanyahu said at Sunday’s weekly cabinet meeting that “we are making a very concentrated and focused effort to vary our markets from our previous dependence on the European market, to the growing Asian and Latin American markets, in which Israel needs to take a small market share and bring about growth, employment and social welfare in the State of Israel.”

He added that “this is strategic and - I think - a very promising effort. It has already begun to show results and will continue to do so. I would like all ministers, each in his or her own field, to join this important effort.”
Despite all the positivity around the region, the ECLAC expect the amount of investment to drop in 2014, and have attributed this forecasted drop in FDI to slow economic growth over the last two years and a drop in prices of metal, one of the regions most rewarding exports.

FDI in the region is expected to vary between a 9 per cent drop and a 1 per cent increase in 2014 “depending on whether or not big company acquisitions are carried out.” Brazil, Latin America’s biggest economy, received over a third of the region’s entire FDI in 2013, around $64 billion, almost double that of the second biggest, Mexico, who received $38 billion, much of which can be attributed to Anheuser-Busch InBev’s buyout of Mexico’s Grupo Modelo.

Europe as a group was the main source of FDI, although inflows from crisis-hit Spain, traditionally a major investor in its ex-colonies, were much lower in 2013. Total global FDI in 2013 reached $1.46 trillion, with over $750 million of that being invested in new and emerging economies, according to the UN body.

About the author: Bradley Shore is an experienced travel and investment blogger, he writes for clients such as Emerald Knight trying to share his experiences and help guide people with there investments.

All statistics and quotes obtained from www.reuters.com
Image license: Nazir Amin, CC BY-SA 2.0