May 2012 Financial News

Regional FDI hits record. But Caribbean inflows still low

May 18, 2012

FOREIGN Direct Investments (FDI) to Latin America and the Caribbean hit a record US$153.4 billion in 2011, though inflows to the Caribbean subregion continues to hover way below pre-recession levels, according to a new report.

Data released by the Economic Commission for Latin America and the Caribbean (ECLAC) shows that the 2011 figure represents a 31 per cent increase in FDIs over 2010. The performance was boosted mainly by FDI to South America increasing by 35 per cent to US$121.3 billion last year.

FDIs to Central America jumped by 16 per cent to $27.7 billion while the Caribbean attracted 20 per cent more FDI at US$4.4 billion.

Due to the fact that some regional countries, including Jamaica, did not provide data for 2011,the absolute difference and growth rate were estimated based on the variation shown during the 12 months of the last period in which available data was provided.

ECLAC noted that FDI flows to Latin America and the Caribbean maintained the previous year's upward trend and was 12 per cent above the historical high of 2008, erasing

the 40 per cent drop triggered by the global financial crisis of 2008 to 2009.

Brazil, which accounts for 43 per cent of the region's GDP and inbound FDI, absorbed 54 per cent of the increase in the flow of FDI to the region, reported ECLAC. The manufacturing industry was the main recipient of FDI in Brazil, with 46 per cent of the total, while the metallurgical sector also performed well largely due to construction of a new integrated plant by Germany's ThyssenKrupp at an estimated cost of US$6.75 billion, the report said.

FDI flows to the other economies of South America increased by 33 per cent, with some countries that had already posted record highs in 2010, such as Chile, Colombia, Peru and Uruguay, attracting even higher flows in 2011, said the study.

However, FDI flows into the Caribbean subregion were still less than half the figure for 2008, it was reported. According to ECLAC, the economies of the Caribbean have been the hardest hit by the economic crisis.

The organisation said the increase in total FDI to the Caribbean after two years of decline was mainly driven by a 25 per cent jump in FDI flows to the Dominican Republic (US$ 2.371 billion), boosted primarily by investments in its mining sector.

Bahamas also attracted considerably more FDI, some US$840 million in the first nine months of 2011, equivalent to 45 per cent more in 2010. This was largely the result of the Baha Mar major tourism project, ECLAC said.

Trinidad and Tobago attracted US$293 million in FDI in the first half of 2011, flat compared to the same period in 2010.

There were no figures for Jamaica, which saw FDI flows drop to US$170 million in 2010 compared to US$480 million in 2009.

FDI flows to Central America was slightly above the pre-crisis figure for 2008, the report said, noting that Panama and Costa Rica are the main destinations for FDI in the subregion.


Source:
BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com
Jamaica Observer
Friday May 18, 2012

http://www.jamaicaobserver.com/business/Regional-FDI-hits-record_11494473#ixzz1vE1d9Fao