Latin America, Caribbean saw record 2022 investment

Latin America and the Caribbean received record flows of foreign direct investment (FDI) last year, a United Nations report showed on Monday, mostly into services, manufacturing and energy as spending recovered after the pandemic.

The report by the U.N. Economic Commission for Latin America and the Caribbean (ECLAC) found that FDI, or income from cross-border asset purchases, surged 55% from 2021 to hit about $225 billion last year, the highest level ever recorded.

“FDI flows to the region had not surpassed $200 billion since 2013, so the 2022 recovery marks a major investment milestone for the past decade,” ECLAC said in the report.

Cross-border investments last year largely centered on the region’s services, oil and gas, and manufacturing sectors, ECLAC said, helping push up the contribution FDI brings to the region’s gross domestic product (GDP) to 4.0%.

The number of mergers and acquisitions increased 7%, while the value of the deals soared 57% to reach $30.15 billion over the year.

ECLAC said the recovery was likely a result of companies, many of which held onto their profits during the coronavirus pandemic, now resuming investment and growth plans.

Brazil, the region’s biggest economy, took the lion’s share of investments at 41%, while Mexico, the second largest, took 17%.

For the first time since 2010, the report added, investments in coal, oil and gas marked the largest share at 24%, a nine-fold increase from 2021.

As more cash flowed into energy projects, notably in Brazil and Colombia, spending on natural resources increased 79%, returning to levels last seen between 2015 and 2019, after a downward trend over the last decade.

Meanwhile, in a shift from 2021, new projects in fossil fuels and the auto sector surpassed those in renewable energy.

Source: Reuters

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