Foreign direct investment (FDI) to Latin America displayed moderate growth in the first half of this year, compared with the year-earlier period in 2012, according to the Economic Commission for Latin America and the Caribbean (ECLAC). The 13 countries of the region that provided data received 102.951 billion dollars, which was 6% higher than the first six months of the previous year.
The main recipient was Brazil, which received 39.014 billion dollars between January and August 2013, which was 10% lower than the sum received in the year-earlier period. This fall was concentrated in the iron and steel, food and beverage and financial services sectors (which had undergone major business acquisitions in 2012).
Thanks to the purchase of the brewery Modelo by the Belgian firm Anheuser-Busch InBev, the first half of 2013 saw Mexico exceed all FDI received during 2012. Even without that deal (valued at 13.249 billion dollars), FDI in Mexico would have been 15% higher than the year-earlier period.
Foreign direct investment flows were also up in Venezuela (44%), Peru (27%), El Salvador (27%), Panama (19%), Costa Rica (15%), Uruguay (8%) and Colombia (5%).
In the first seven months of the year, inflows to Chile were 26% lower than the same period in 2012, although the decrease is due to extraordinary operations recorded in April. Inflows were also down in Guatemala, Argentina and the Dominican Republic, where a major acquisition had significantly bolstered the figures for 2012 (Anheuser-Busch InBev bought the Dominican National Brewery for 1.237 billion dollars).
The data presented today in the press release are from the update that ECLAC annually carries out to the figures from Foreign Direct Investment in Latin America and the Caribbean, which was last released in May.In this sense, ECLAC is confirming the trend predicted that month for a moderate increase in the region’s FDI during 2013.
In terms of outward foreign direct investment, this dipped during the first half of the year. The 10 countries of the region that presented data accounted for 6.385 billion dollars of investment abroad in the first six months of the year (compared to 24.446 billion for the same period of 2012).
Mexico, which had invested record amounts abroad last year, reduced outflows by 71% in the first half of 2013, while Brazil’s figure was down 36% because of a strengthening of the trend for Brazilian enterprises to get into debt with their foreign subsidiaries. In Chile, foreign investment posted a fall that – as with FDI inflows – was concentrated in April.
According to ECLAC, outward FDI flows (which reached historic highs in the three previous years) remain highly volatile. Nevertheless, the expansion of transnational Latin American enterprises (trans-Latins) continues apace, and amounts for the second half of the year are expected to exceed those from the first six months – mainly because this will include some major cross-border acquisitions that have already been completed (the Chilean company Corpbanca bought Helm Bank Colombia, Chilean Entel bought Nextel Peru and the Colombian firm Nutresa bought the Chilean food company Tresmontes Lucchetti).
Mexico’s foreign investment is also expected to rise with the confirmation of the acquisition of the rest of the Netherlands firm KPN by América Móvil (currently valued at over 9.0 billion dollars). Brazil’s external investment could also post a positive balance again if the trend from July and August continues for Brazilian trans-Latins to stop getting into debt with their foreign subsidiaries.
Preliminary data for 2013 show that, following three years of continued rises and historic figures, Latin America continues to attract growing amounts of foreign direct investment. According to ECLAC, governments should take advantage of this to channel such investment into sectors that can help to change the region’s production patterns.