December 13, 2013
In the first semesterFriday, October 11, 2013
Foreign investment drops 32 percent
Foreign direct investment to Argentina plunged 32 percent in the first six months of the year compared to 2012, according to a report issued yesterday by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) released yesterday.
Argentina registered US$5.165 billion in foreign investment from January to July, compared to US$7.56 billion in the same period last year. Economic analysts tied the drop to limits imposed on foreign currency that have made companies think twice before investing in Argentina.
“Argentina used to be second in the ranking during the 1990s but then dropped due to the (2001) economic crisis. Then with the economic consolidation Argentina was in a better place but the foreign currency limitations led to a new drop,” Juan Paladino, economist at Ecolatina agency, told the Herald. “The government’s limits prevents money from leaving but also from entering the country.”
In Latin America as a whole, foreign investment grew 6 percent with a total of US$102.951 billion invested. The main recipient was Brazil, which had US$39.014 billion invested but dropped 10 percent compared to 2012. The drop was registered mainly on financial services, food and drinks production and iron and steel production, which had received high levels of investments in 2012.
“Many companies have decided to postpone investments in Argentina, speculating on a possible peso devaluation,” Agustín D’Attellis, economist and member of the pro-government group La Gran Makro told the Herald.
“The government should work on solving the differences between the legal and illegal market foreign currency market to make capital inflow more attractive for companies,” he added.
México saw its foreign investment rise a whooping 158 percent compared to 2012, largely due to the purchase of the beer company Modelo by the Belgian firm Anheuser-Busch InBev, which meant a US$13.249 billion investment. FDI also grew in Venezuela (44 percent), Perú (27 percent), El Salvador (27 percent), Panamá (19 percent), Costa Rica (15 percent), Uruguay (8 percent) and Colombia (5 percent).