Foreign investment in Latin America plummets, says UN

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Foreign investment in Latin America plummeted 35% in 2020 compared to the previous year, says UN regional commission on economic cooperation. Argentina suffered a fall of 39.7%, according to the report.

Foreign investment in Latin America plummeted 35 percent in 2020 compared to the previous year, the UN regional commission on economic cooperation said on Thursday.

The region was one of the most affected in the world by the coronavirus pandemic, the Economic Commission for Latin America and the Caribbean (ECLAC) said in a report. It said the investment drop amounted to US$56 billion.

“We are talking about a big fall, a trend that had already been decreasing since 2013,” said Alicia Bárcena, ECLAC’s executive secretary.

Latin America received a total of US$105 billion in direct foreign investment in 2020. 

It was the second successive year on year drop and part of a “stagnation” observed since 2010, the report said.

It compared the fall to the one experienced in 2009 when the world economy was in a similar crisis.

Only five of the region’s 33 states – the Bahamas, Barbados, Ecuador, Paraguay and Mexico – experienced an increase in foreign investment in 2020.

A large part of the region’s woes was due to Brazil, the largest economy, suffering a 35.4 percent fall in foreign investment, said Bárcena.

Argentina suffered a drop of US$2.644 billion from the previous year to US$4.019 billion in 2020 or 39.7 percent.

Central America was the worst hit with an 89 percent drop, while South America saw a 40 percent fall and the Caribbean lost 25.5 percent.

“At a time when the region needs investments that would allow it to advance towards a sustainable recovery, and foreign investment could play a favourable role [in that], transnational investments have reduced,” said the ECLAC report.

Source: Times

There is a strong view by foreign investors that Latin American countries that have pitched left to socialist-style command type economies like Venezuela, Argentina etc in South America are to be treated with extreme caution.

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