Andina

Foreign direct investment in Peru rose by 919% to US$7.455 billion in 2021

Photo: ANDINA/Andres Valle

Photo: ANDINA/Andres Valle

15:00 | Lima, Nov. 29.

Peru received US$7.455 billion in foreign direct investment (FDI) in 2021, which positioned it as the fifth-largest FDI recipient country in Latin America, according to the latest report released by the Economic Commission for Latin America and the Caribbean (ECLAC).

Thus, Peru was ranked fifth behind Brazil (US$46.441 billion), Mexico (US$33.439 billion), Chile (US$15.252 billion), and Colombia (US$9.727 billion).

"FDI inflows to Peru recovered strongly from 2020, when they had fallen to their lowest level since 1992. In 2021, US$7.455 billion of FDI entered the country, which was the highest amount in eight years and represented a year-on-year change of 919%," the study said.

"Most FDI came as reinvested earnings (94% of the total), whose amount was not only almost 100 times as great as in 2020, but double the average since 2003," it added.

Latin America

ECLAC stated that, in a context of weak economic recovery, Latin America and the Caribbean received US$142.794 billion in foreign direct investment (FDI) in 2021, 40.7% more than in 2020, but this growth was not enough to achieve the levels seen prior to the pandemic.

Moreover, it pointed out that, globally, FDI inflows increased by 64% in 2021, reaching approximately US$1.6 trillion. As a destination for global investments, Latin America and the Caribbean saw its share decline, however, representing 9% of the total – one of the lowest proportions in the last ten years and far below the 14% recorded in 2013 and 2014.

According to the report, the reactivation of investments in 2021 occurred in all sub-regions. The countries that received the most FDI inflows were Brazil (33% of the total), Mexico (23%), Chile (11%), Colombia (7%), Peru (5%), and Argentina (5%).

The services and natural resources sectors, with increases of 39% and 62%, respectively, were the most dynamic sectors, the document indicates. In the manufacturing sector, the decline in FDI inflows in 2021 (-14%) was attributable to decreased investments in Brazil.

The European Union and the United States were the main investors in the region in 2021, representing 36% and 34% of the total, respectively.

Telecommunications and renewable energy held firm as the sectors that spark the most interest among foreign investors for carrying out new projects; however, the announcements of new investment projects did not rebound in 2021 and are at their lowest point since 2007 (US$51.500 billion). 

"This coincides with greater interest on the part of investors in developing new projects in developed economies, mainly the European Union and the United States," ECLAC stated.

The number of mergers and acquisitions in the region increased (33%) in 2021, but is still at one of the lowest levels in the last decade. The 20 largest deals amounted to US$18 billion and occurred in Brazil, Chile, Colombia, Guatemala, and Mexico.

"In a region with low overall investment levels, foreign direct investment is critical for designing production policy," ECLAC's Executive Secretary, Jose Manuel Salazar-Xirinachs, emphasized.

"For foreign direct investment to have a positive impact, it is necessary to coordinate productive development policies with the attraction of high-productivity investments, in activities that would support virtuous development processes in terms of inclusivity, employment quality, environmental sustainability, innovation and technological complexity," ECLAC's highest authority warned.

"The cascading crises that the region is experiencing force us to define strategies to position Latin American and Caribbean countries on the world stage for investments," he added.

(END) CNA/JJN/RMB

Published: 11/29/2022
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