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Foreign direct investment in Latam remains strong and increases 6% in first half of 2013

Friday, October 11th 2013 - 13:15 UTC
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Brazil and Mexico remain the main magnets for FDI according to the ECLAC report Brazil and Mexico remain the main magnets for FDI according to the ECLAC report

Foreign direct investment (FDI) to Latin America displayed moderate growth in the first half of this year, compared with the 2012 similar period, according to the Economic Commission for Latin America and the Caribbean (ECLAC). The 13 countries of the region that provided data received 102.951 billion dollars, which was 6% higher than the first six months of the previous year.

The main recipient was Brazil, which received 39.014 billion dollars between January and August 2013, which was 10% lower than the sum received in the year-earlier period. This fall was concentrated in the iron and steel, food and beverage and financial services sectors (which had undergone major business acquisitions in 2012).

Thanks to the purchase of the brewery Modelo by the Belgian firm Anheuser-Busch InBev, the first half of 2013 saw Mexico exceed all FDI received during 2012. Even without that deal (valued at 13.249 billion dollars), FDI in Mexico would have been 15% higher than the year-earlier period.

Foreign direct investment flows were also up in Venezuela (44%), Peru (27%), El Salvador (27%), Panama (19%), Costa Rica (15%), Uruguay (8%) and Colombia (5%).

In the first seven months of the year, inflows to Chile were 26% lower than the same period in 2012, although the decrease is due to extraordinary operations recorded in April. Inflows were also down in Guatemala, Argentina and the Dominican Republic, where a major acquisition had significantly bolstered the figures for 2012 (Anheuser-Busch InBev bought the Dominican National Brewery for 1.237 billion dollars).

In terms of outward foreign direct investment, this dipped during the first half of the year. The 10 countries of the region that presented data accounted for 6.385 billion dollars of investment abroad in the first six months of the year (compared to 24.446 billion for the same period of 2012).

Mexico, which had invested record amounts abroad last year reduced outflows by 71% in the first half of 2013, while Brazil's figure was down 36% because of a strengthening of the trend for Brazilian enterprises to get into debt with their foreign subsidiaries. In Chile, foreign investment posted a fall that - as with FDI inflows - was concentrated in April.

According to ECLAC, outward FDI flows (which reached historic highs in the three previous years) remain highly volatile. Nevertheless, the expansion of trans-national Latin American enterprises (trans-Latins) continues apace and in the second half of the year are expected to exceed those from the first six months. Mainly because this will include some major cross-border acquisitions that have already been completed (the Chilean company Corpbanca bought Helm Bank Colombia, Chilean Entel bought Nextel Peru and the Colombian firm Nutresa bought the Chilean food company Tresmontes Lucchetti).

Mexico's foreign investment is also expected to rise with the confirmation of the acquisition of the rest of the Netherlands firm KPN by América Móvil (currently valued at over 9bn dollars). Brazil's external investment could also post a positive balance again if the trend from July and August continues for Brazilian trans-Latins to stop getting into debt with their foreign subsidiaries.

Preliminary data for 2013 show that, following three years of continued rise and historic figures, Latin America attracts growing amounts of foreign direct investment.

Categories: Economy, Latin America.

Top Comments

Disclaimer & comment rules
  • Math

    We might not be developed nations, but social conditions did improve for us. Except Argentina, Bolivia and Venezuela of course. Hahaha

    Oct 11th, 2013 - 01:34 pm 0
  • Brasileiro

    Anheuser-Busch InBev's Brazilian too. It's fifty-fifty Brazil and Belgium. Its headquarters is in Belgium and its executive board is Brazilian. And 78% of your taxes are collected in Brazil, through the sale of their beers (Antarctica, Brahma, Skol, etc..)

    Oct 11th, 2013 - 02:40 pm 0
  • geo

    very normal and routine investment flows even rare..!

    Oct 11th, 2013 - 06:43 pm 0
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