Madrid, April 19 (EFE). Latin America’s overseas investment exceeded pre-pandemic levels in 2021 after dropping to “historic lows” in 2020 due to the coronavirus health crisis, according to a Global Latam 2021 report presented Tuesday in Madrid.
The document ICEX-Invest in Spain and the Ibero-American General Secretariat (Segib) analyzes the current state of the Latin American economy and companies through their internationalization and confirms investment flows with Spain.
The fourth edition of the report, which devotes a special chapter to Colombia, highlights, among several aspects, the return to the path of offshore direct investment in the Latin American region and the uncertainty about the future.
And foreign investments by Latin American companies increased last year to $57,403 million, according to the document, “which is one of the highest numbers in the historical series, and 25.5% more than pre-pandemic levels.”
Maria Peña, CEO of ICEX, took part in the presentation, celebrating Spain as the “preferred destination” for direct investment flows from Latin America, and Ibero-American Secretary General, Andres Allamand, who estimated that “30% of Spanish direct investment is directed to Latin America”.
“TAILWIND” FOR THE LATIN AMERICAN ECONOMY
Adrián Blanco, of ICEX, analyzed in the presentation: “In 2021 the flows will triple, and this is very positive news, Latin American companies are healthy, traveling abroad and recovering.”
Blanco explained that the development of commodity prices and interest rates, as well as the growth of the Group of Seven countries and China, were “a tailwind for the Latin American economy in 2021.”
He cited corporate bond issuances “$74,000 million by 108 companies leading Latin American investments in the world”, business confidence indicators and the development of local currency exchange rates as reasons for this recovery.
He referred to the investments received by Latin American countries and highlighted the situation in Brazil and Chile, which was also reflected in the study.
According to the document, Brazil has the highest Latin American investments in the world with $277,454 million, followed by Mexico (178.947 million) and Chile ($145333 million).
Regarding its economic size (measured by the size of GDP), however, Chile leads the accumulated foreign investment, apart from the rest of the countries, followed by Colombia and Brazil.
Conversely, other economies such as Peru or Argentina have a less internationalized business fabric.
Barometer to give voice to business concerns
For the first time, the report accompanies a scale in which the concerns of 361 Latin American companies are collected and “aimed at giving companies a voice to express their concerns and demands in public policies and investment prospects.”
Thus, this survey shows that 49.6% of companies consulted are concerned with achieving “competitive pensions in their sector”, 39.3% on talent and 31% on raw material prices.
Similarly, sustainability is among the factors with uncertainty at 30.2%, new consumer habits for 29.9%, digitalization for 29.4%, and protectionism for 24.1%.
Latin America, the fourth investor in Spain
The report also analyzes Latin American investments in Spain which, according to the CEO of ICEX, are becoming increasingly “more diversified.”
The study notes that “Latin American companies contribute in a very relevant way to the Spanish business fabric, and together they maintain an accumulated investment of €47,168 million, 9.8% of the total foreign investment received by Spain.”
It also reflects that the trend is “growing strongly,” with investment increasing by 92% since 2010.
He hints that “only the United States, the United Kingdom and France have invested more in Spain than their Latin American counterparts, exceeding other middle-income economies such as China in terms of investment volume.”
Mexico leads the investment with 58.9% of the total, followed by Argentina (15.5%), Venezuela (8%), Brazil (6.7%), Uruguay (2.9%), Dominican Republic (2, 4%) and Panama 2%.
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