UN Says Brazil Pulls Down Region’s Foreign Investments

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The slowdown of the Brazilian economy was one of the key factors for the decline in foreign direct investments (FDI) inflows in Latin America and the Caribbean in 2015, according to the Economic Commission for Latin America and the Caribbean (ECLAC).

According to the United Nation’s Commission the region’s FDI inflow declined by 9.1 percent in 2015 in comparison to 2014, to US$179.10 billion dollars, the lowest level registered since 2010.

The decline, according to the entity ‘is due to lower investment in sectors linked to natural resources, mainly mining and hydrocarbons, and to the deceleration of economic growth, above all in Brazil’. The commission’s annual report on foreign direct investments was released on Wednesday at ECLAC’s headquarters in Santiago, Chile.

Data from Brazil, shows that the inflow of foreign direct investments shrank by 23 percent to US$75.075 billion dollars last year. Brazil, however continues to be the top recipient of foreign investments in the region, obtaining approximately 42 percent of all FDI inflows into Latin America.

The United States was once again the main investor in the region last year, responsible for 25.9 percent of FDI, followed by the Netherlands (15.9 percent) and Spain (11.8 percent).

For 2016, ECLAC estimates that the inflow of foreign direct investments will remain below the levels reached in recent years, due to the economic prospects of the countries in the region. “It could decline as much as 8 percent, although it will continue to be an important factor in the region’s economies,” stated the commission’s report.

As for foreign direct investments outflows from the region, these declined substantially to US$47.362 billion dollars in 2015, down by 15 percent from the year before. Although Brazil and Mexico are the countries with the most capital invested outside their borders, in 2015 Chile was the biggest investor abroad.