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Foreign Investments in Latin America Fell 23.5% in First Half of 2014

Foreign Investments in Latin America Fell 23.5% in First Half of 2014

Posted by Juan Gavasa on October 24, 2014

Foreign direct investments in Latin America fell 23.5% in the first half of 2014 compared with the same period last year due to fewer large corporate acquisitions and a decline in mining investments, a United Nations agency said Thursday.

The U.N.’s Economic Commission for Latin America and the Caribbean, or Eclac, said foreign investment in 13 Latin American and Caribbean countries totaled $84.1 billion in the first six months of this year, down from $110 billion in the year-earlier period.

The organization, which is based in Santiago, Chile, said a significant part of the decline came from Mexico, where Anheuser-Busch InBev NV’s $13.2 billion purchase last year of the Grupo Modelo SAB de CV gave an “exceptional boost to FDI flows.”

Foreign investments in Mexico totaled $9.7 billion in the January to June period, down from $28.8 billion in the same period last year, Eclac said.

Important mineral producers, like Chile and Peru, also saw a decline in foreign investments due to lower metal prices that affected their mining industries, the agency said.

In Chile, the world’s biggest copper producer, foreign investments fell 16% in the first eight months of this year to $10.4 billion from $12.3 billion. “The fall was especially concentrated in the mining sector, which could persist this year,” Eclac said. The agency only gave figures for the January to August period for Chile.

The U.N said foreign investments in Peru, a major global producer of copper, gold, silver and zinc, were down 18% to $4.68 billion from $5.73 billion.

In Argentina, foreign direct investments had a net outflow of $55 million as a result of Spanish energy giant Repsol SA’s disinvestment from the state-owned YPF energy firm. Foreign investments in Venezuela fell 54% to $1.76 billion, Eclac said in a statement without providing further information.

Countries that saw an increase in foreign investments include Brazil, where they climbed 8% to $42 billion, and Colombia, where they rose 10% to $8.45 billion. Uruguay, Panama and the Dominican Republic also posted an increase in foreign investments, Eclac said.

Latin American economies have slowed this year due to weaker global demand for its raw materials. The World Bank earlier this month cut its forecast for regional growth by nearly half to 1.2%. The region grew by 2.4% in 2013.

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