Here is a cheerful news for those sickened by the gloom and doom talk of Cassandras about Brazil in recent years. Brazil received 62.5 billion dollars of Foreign Direct Investment (FDI) in 2014 and continued to be the top recipient of FDI in the region according to the 27 May report of the Economic Commission for Latin American and Caribbean(ECLAC). Brazil got 40% of the total FDI of 153 billion received by Latin America in 2014 and almost three times the FDI received by Mexico, currently the darling of marketeers.
FDI received by Brazil is more than twice the FDI flow into India which was 29 billion dollars in the fiscal 2014-15.
Other major Latin American recipients of FDI in 2014 were Mexico-23 billion, Chile-22 bn, Colombia-16 bn, Peru-6.7 bn and Argentina- 6.6 bn. Central America got 10.5 bn of which Panama accounted for 4.7 bn
Services sector received the largest share of FDI followed by manufacture, mining, infrastructure and renewable energy.
Netherlands was the largest investor in Latin America in 2014 accounting for 20% share of the FDI in the region, followed by USA-17% and Spain-10%.
Not surprisingly, even ECLAC could not find actual figures of FDI from China, since the Chinese activities are non-transparent. ECLAC estimates that the Chinese investment in 2014 might have been 10 billion and has guessed that China's annual FDI in Latin America could have been around 10 billion dollars from 2010 to 2013. The Chinese Premier, who has just made a tour of Brazil, Colombia, Peru and Chile, has announced billions of dollars of credit for investment including in railways and infrastructure
FDI received by Latin America has decreased by 16% in 2014 from 2013 when it reached a record of 183 billion. ECLAC predicts further decline of 10% in 2015. Falling prices of oil and metals are the main reason for the projected decrease in FDI
Outward FDI of Latin America was 30 billion dollars in 2014. Chile was the largest foreign investor with 12 billion dollars, followed by Mexico-7.6 bn, Colombia-3.8 bn and Argentina –2.1 bn. Most of the outward FDI has gone into Latin America itself.
There has been no big Indian investment in Latin America in 2014. But there has been a number of small investments and announcements in areas such as two wheelers and auto parts. Nor was there any significant Latin America investment in India last year. 2015 might see some large investment by Carlos Slim, the Mexican billionaire ( the second richest person in the world, according to Forbes) who visited India last month to explore the opportunities offered by the large and fast growing market of India.
Although the Brazilian economy has slowed down and the country is mired in corruption scandals, this is a good time for Indian investment in Brazil, since the prices of assets are low and the currency is weak. Argentina, with more difficulties, offers even better opportunities. In any case, these two countries are certain to recover next year and get back on the path of growth and prosperity. The decline in prices of minerals and commodities have made mining and agribusiness assets cheaper. The opening of the Mexican energy sector to private sector and the emergence of Mexico as a 'manufacturing hub for the Americas' offer new opportunities for Indian investors. The Indian energy companies, especially, should seriously look at acquisition of oil fields in Brazil, Mexico, Colombia and shale reserves in Argentina. It is timely that an Indian delegation of oil companies lead by the Minister of Petroleum has just visited Mexico and Colombia.