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Foreign investment drops 9 pct in Latin America: ECLAC

SANTIAGO
2016-06-16 05:26

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Foreign direct investment (FDI) in Latin America and the Caribbean fell 9.1 percent in 2015 to reach 179.1 billion U.S. dollars, the lowest figure since 2010, according to the Economic Commission for Latin America and the Caribbean (ECLAC) on Wednesday.

At the launch of its new report, "Foreign Direct Investment in Latin America and the Caribbean 2016", the UN body linked this drop to low investment in mining and oil and gas, as well as an economic slowdown across the region, especially Brazil.

For 2016, the report said FDI could drop 8 percent if countries in the region do not seek out quality capital investments. Alicia Barcena, ECLAC's executive secretary, told a press conference that "in the current global economy, FDI is linked to relevant actions in national and regional development strategies." She added that countries "need to...diversify their economies, empower innovation, incorporate new technologies, and face the challenges of the 2030 Sustainable Development Goals."

The fall of FDI seen in Latin America and the Caribbean in 2015 contrasted with a 36 percent increase in FDI around the world, especially due to a rise in mergers and acquisitions, ECLAC announced.

The drop in the region hit Brazil the hardest, with FDI falling 23 percent, or 75 billion U.S. dollars. However, Brazil remains the main destination of FDI, claiming 42 percent of the regional total. In Mexico, the second-largest receiver, FDI rose by 18 percent to reach 30.285 billion U.S. dollars, the highest level in seven years.

More investments in the manufacturing, automotive and telecommunication sectors helped reach this level. However, the woes of the mining industry and its falling prices contributed to FDI falling in Colombia by 26 percent and in Chile by 8 percent.

ECLAC also highlighted important changes in FDI patterns over the last decade: the relevance of the extractive industries has fallen, the automotive sector is showing particular vigor, while telecommunications and renewable energies are growing.

"Investments in renewable energies, and other environmental proposals, remain a pillar of ECLAC's proposal to develop the region...and make it a leader in productivity, energy and low-carbon consumption," emphasized Barcena.

In 2015, the U.S. remained the main investor of the region, with 25.9 percent of FDI, followed by the Netherlands with 15.9 percent and Spain with 11.8 percent.

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