Brazil Led Region’s Direct Foreign Investment Inflows in 2016

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Despite the deep economic recession facing the country, Brazil led foreign direct investment (FDI) inflows in Latin America, obtaining 47 percent of total direct investment in the region, approximately US$78.9 billion last year according to the Economic Commission for Latin America and the Caribbean (ECLAC).

Notwithstanding the increase by 5.7 percent in foreign investments in Brazil last year, the overall FDI decreased by 7.9 percent in Latin America and the Caribbean with the total of inflows of US$167.04 billion.

“Foreign direct investment has been an important factor for the development of export activities that are key to the growth of Latin America and the Caribbean, as well as for the creation of new sectors,” said Alicia Bárcena, ECLAC’s Executive Secretary on Thursday, while admitting that big productivity gaps persist in the region and that new technological scenarios require new policies to harness the benefits of FDIs.

According to the United Nation’s entity, the region’s results may be explained by the low prices of raw materials and their impact on investments directed towards the natural resources sector as well as the slow growth of economic activity in several economies in the region.

The ECLAC report shows that in 2016, Latin America and the Caribbean received 10 percent of the total global FDI, a similar share to that of 2015 but below the 14 percent average that had been achieved between 2011 and 2014, before recession hit many of the region’s nations.

In 2017, ECLAC projects further decline in FDI inflows, by approximately 5 percent.