MercoPress. South Atlantic News Agency

LatAm lures record foreign direct investment in 2022

Brazil accounted for 40.7% of the FDI

According to a report from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) released Monday, Latin America and the Caribbean attracted a record volume of foreign direct investment (FDI) in 2022 with US$ 224.58 billion injected, which represented a 55.2% increase from 2021.

“FDI flows to the region had not exceeded US$200 billion since 2013, so the 2022 recovery sets an important investment milestone in the last decade,” the report highlighted.

Unlike financial investments, which are aimed at the financial market, foreign direct investments are aimed at job creation, such as buying domestic companies or expanding foreign companies to other countries, Agencia Brasil explained. According to ECLAC, the sectors that benefited most in the last year were services, energy (renewable and non-renewable), and manufacturing.

In 2022, the number of mergers and acquisitions resulting from FDI increased by only 7%, but the value of the deals soared by 57% to US$30.15 billion in the year. The increase is due to the resumption of investment and expansion plans by companies after the Covid-19 pandemic, it was also explained.

Brazil attracted nearly 41% of FDI destined for Latin America and the Caribbean. In second place comes Mexico, with 17%. The two countries are the largest economies in the region. In Brazil, the volume of FDI almost doubled from 2021 to 2022, growing 97%. In Mexico, growth was lower and reached 14% compared to the previous year, Agencia Brasil also pointed out.

Nevertheless, Latin America attracted only 8% of FDI in 2022, the lowest share when compared to Europe, Asia-Pacific, Africa, the Middle East, and North America.

FDI in Argentina grew 123.2% year-on-year during 2022 totaling US$15.408 billion, the highest level since 2012, the document also noted. Argentina ranked fifth in the region, behind Brazil (40.7%), Mexico (17.3%), Chile (9.3%), and Colombia (7.5%).

In Argentina ”most of the FDI corresponded to inter-company loans (57 percent) and in second place to reinvestment of profits (37 percent), and both received more capital than in 2021,” ECLAC's report highlighted. Most investments went to mining and quarrying, mostly associated with lithium and copper; extraction of metalliferous minerals; and computer programming and consulting.