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Foreign investment into Latin America gets cut by nearly half during pandemic


According to a report by the United Nations Conference on Trade and Development, Latin America’s foreign direct investment fell by 45 percent in 2013. The World Investment Report 2021It was clear to see the difference in the impact of Latin American countries on the world’s other countries.

“The region suffered the sharpest FDI decline in developing countries,” said James Zhan, UNCTAD’s director of investment. “Latin American economies faced a collapse in export demand, falling commodity prices and the disappearance of tourism, leading to one of the worst contractions in economic activity across the world.”

The global decline in foreign direct investment has been one-third to $1 Trillion. This is the lowest foreign investment since 2005. The total amount of foreign direct investment in Latin America was $87.6 Billion.

The most affected sectors by the strain on foreign capital in Latin America are infrastructure projects, manufacturing, and of course, tourism. The region saw a dramatic drop in global travel, as it receives an estimated 10% of its GDP from foreign visitors. Mexico lost for instance about $130 billionIn 2020, the tourism sector will generate $1.2 billion. In smaller countries like Costa Rica, where the influx of tourists is a major factor in their economies, revenue from travel fell half.

The report stated that although exporters of precious metals and minerals suffered in the first half of the year, they rebounded before 2020 when trade started to pick up in Latin America.

Brazil was particularly affected by the low level of oil and gas investments, as well as losses in the wider energy sector. The country lost nearly two-thirds its foreign investment in 2020, its lowest level in more than 20 years.

“Most importantly, the pandemic had severe consequences for international investment in sustainable development goals-relevant sectors, with a contraction of infrastructure investment by over 75%,” Zhan said. “This adds to the region’s vulnerability and represents a major roadblock to achieving the sustainable development goals.”

Unfortunately, this comes as little surprise after the region suffered the worst economic contraction of any area in the developing world, as an estimated 8 percent of Latin America’s overall GDP was lost to the pandemic. The region is still the global hotspot of COVID-19, with alarmingly high rates of deaths and cases.

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