Economy & Business - July 2021

REGION: Exporting countries hit hard by fall in FDI

A June report by the United Nations Conference on Trade and Development (UNCTAD) has highlighted that global flows of foreign direct investment (FDI) fell significantly in 2020. The coronavirus (Covid-19) pandemic led FDI levels to fall by approximately one third, down to US$1trn, a level last seen in 2005. The Latin America and the Caribbean region has been particularly impacted, with FDI falling by 45% to US$88bn, making it the worst impacted developing region in the world. For South America, the impact was even greater, with a 54% fall in FDI to US$52bn. Among the countries most heavily affected were Colombia and Peru, with this largely being attributed to the fall in value of commodity exports from these countries. Although this trend was exacerbated by the pandemic, commodity prices and investment in the region have been falling since 2020. The ongoing political and economic uncertainty in the region has also led observers to warn that a rapid recovery of FDI inflows into South America – and the Andean countries in particular – is unlikely.

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