Brazil, with 34.8% of the total, was the country that received the highest FDI in 2023, with $64,230 million, followed by Mexico with 16.4 percent.
Foreign direct investment (FDI) in Latin America reached $184,304 million in 2023, 9.9 percent less than the previous year, due to a fall in investments in the area of services, Cepal reported Thursday.
The negative performance “contributed mainly to a fall in FDI inflows to the services sector in most of the region’s economies, in contrast to the good performance of this sector in 2022,” the Economic Commission for Latin America and the Caribbean (ECLAC) said in a report.
However, FDI inflows to the region accounted for 14 per cent of the global total in 2023, a share that exceeds the average recorded in the 2010s (11 per cent), said Cepal, a United Nations technical agency based in Santiago.
The fall in flows in Latin America during 2023 “must be framed in a global context of declining FDI flows, resulting from high interest rates and the persistence of geopolitical conflicts,” explained Marco Llinás, director of the division of Productive and Business Development of Cepal.
The region was hit by the decline in investments in Brazil (-14 per cent) and Mexico (-23 %), the two main Latin American economies.
Peru also experienced a decrease in FDI inflows (-65 per cent), while Argentina and Chile registered an increase (57 per cent and 19 per cent, respectively).
Main destinations
Brazil, with 34.8% of the total, was the country that received the highest FDI in 2023, with $64,230 million, followed by Mexico (16.4 per cent), Argentina (12.9 per cent), Chile (11.8 per cent) and Colombia (9.3 per cent).
The United States (33 per cent of the total) and the European Union (12 per cent, excluding the Netherlands and Luxembourg, which had 8 per cent) were the main investors, although China reduced its investments in the region.
In 2023, FDI inflows into the services sector fell 24 per cent, in contrast to the good performance of 2022. However, this sector maintained the lead in the region as a whole, with 46 per cent of the total.
Investment in manufacturing, meanwhile, grew again for the second year and increased 9 per cent compared to 2022. Also, those dedicated to natural resources (16 per cent).
“Five exceptions, FDI continues to focus on sectors and countries that offer relatively cheap natural resources or labour,” warned Cepal, which calls for “add more value, in the case of natural resources, as well as diversifying and climbing into sectors with more skilled labour.”
This article has been translated after first appearing in Diario El Mundo