Foreign direct investment in Latin America rose 13.2 percent in 2018, ending a five-year spell of FDI contraction, the Economic Commission for Latin America and the Caribbean (ECLAC) said in a report released Wednesday.
Nevertheless, the report said that "this recent growth is explained by just a few countries and by components of FDI that do not necessarily reflect a growing desire among foreign investors to set up new business in the region."
Flows of FDI to the region totaled $184.29 billion last year, a figure that is still below the values recorded during the height of the commodity boom, ECLAC said in a report that that United Nations regional organization's executive secretary, Alicia Barcena, presented at a press conference at ECLAC's headquarters in the Chilean capital.
The report showed a wide disparity in the region, with FDI inflows relative to 2017 increasing in 16 countries and decreasing in 15 countries.
Much of the increase in FDI last year was due to greater investment in Brazil and Mexico, which accounted for 48 percent and 20 percent of total inflows, respectively.
FDI flows to Brazil totaled $88.32 billion, up 25.7 percent from 2017, while FDI in Mexico last year amounted to $36.87 billion, up 15.2 percent, ECLAC said.
Argentina was the third-biggest recipient of FDI with inflows totaling $11.87 billion, up 3.1 percent from 2017, followed by Colombia ($11.35 billion, down 18 percent), Panama ($6.58 billion, up 36.3 percent) and Peru ($6.49 billion, down 5.4 percent).
FDI flows to Chile amounted to $6.08 billion in 2018, up 3.9 percent from the previous year, but still were clearly below the average registered in the last decade, ECLAC said.
FDI in Central America rose 9.4 percent in 2018 relative to the previous year due mainly to strong growth in Panama.
Flows of FDI to the Caribbean were down 11.4 percent due to a 29 percent drop in investment in the Dominican Republic, the main receiver in that subregion.
ECLAC said in its report that the overall growth in FDI does not mark a return to the region's boom years.
"Upon analyzing the different components of FDI, it can be seen that the dynamism regained in 2018 was not based on the entry of capital contributions, which would be the most representative source of companies' renewed interest in establishing themselves in the region's countries," the report titled "Foreign Direct Investment in Latin America and the Caribbean 2019" said.
Instead, it was based "on the growth in profit reinvestment and loans between companies."
Manufacturing was the main target sector of foreign capital, accounting for 47 percent of FDI inflows, followed by services at 35 percent and natural resources at 17 percent. EFE-EPA