By: Staff Writer
July 14, 2023
The Economic Commission for Latin America and the Caribbean (ECLAC) said that foreign direct investment (FDI) for the Latin America and Caribbean region
ECLAC, in their “Foreign Direct Investment in Latin America and the Caribbean, 2023,” report said that there was a record rebound of foreign direct investment. “In 2022, FDI inflows to the region grew by 55.2% compared to 2021, reaching a record high of US$224.579bn. Since 2013, annual FDI inflows to the region have remained below US$200bn, meaning that the recovery in 2022 marks an important investment milestone for the preceding decade. This recovery was seen in the main recipient economies and was characterized by a marked interest in services, renewed interest in hydrocarbons and continued interest in manufactures in the countries that have built the largest capacity. With this increase, FDI inflows to the region also rose, to 4.0 percent of GDP.”
The report also said: “In the Caribbean, Guyana recorded the highest FDI inflows, which totalled US$ 4.389bn in 2022. The result is similar to the record inflows in 2021 (only a -1.5 percent change). The performance is due, once again, to foreign investors’ interest in the country’s hydrocarbon sector. Hence, the natural resources sector accounted for 99 percent of FDI inflows into the country in 2022, although inflows into the sector were two percent lower than in 2021. Manufactures (which represent 1% of the total) also recorded a drop, of nine percent.
“The project announcements registered in 2022 indicate that the country’s hydrocarbon sector will continue to receive large investments in the coming years. In this connection, the United States-based oil company ExxonMobil announced a US$ 10 billion investment project in the country.
The Dominican Republic received US$ 4.01bn in FDI, 25 percent higher than in 2021 and the highest level in the last 30 years. An examination of FDI components shows that the result was due to a 39 percent increase in equity, which accounted for 56 percent of total inflows. Meanwhile, reinvested earnings (36 percent of the total) fell by 14 percent compared to the previous year. Intercompany loans were the smallest component (eight percent of the total), although they recorded a significant increase compared to the negative result obtained in 2021.
For Central America on the other hand, “With FDI inflows of US$ 3.673bn in 2021, Costa Rica was the leading FDI recipient in Central America. This figure is higher than the amount received in 2021 (2.2 percent variation) and in line with the highest amounts received by the country. Reinvested earnings accounted for the largest share of FDI (71 percent of the total) and grew by 30 percent. Equity (18 percent of the total) and intercompany loans (12 percent of the total) fell by 28 percent and 39 percent, respectively.
It added: “In 2022, Panama was the second largest recipient of FDI in Central America, with US$2.513bn, up 43 percent from 2021. While this recovery is significant, FDI inflows remain below pre-pandemic levels. Reinvested earnings and intercompany loans were the main components of FDI, both of which grew relative to 2021, while equity inflows were negative. As there is no information available on FDI by sector or origin for 2022, it is not possible to determine where FDI inflows were directed or where they originated.”