São Paulo – Global foreign direct investments (FDI) flows reached US$ 1.46 trillion last year, an increase by 11% in relation to 2012, according to the data released this Tuesday (28) in the Global Investment Trends Monitor, published by the United Nations Conference for Trade and Development (UNCTAD). The total is still below the record US$ 2 trillion registered in 2007, but is closer to the average observed in the years prior to the international financial crisis of 2008.
FDI in developing countries, however, was record-breaking in 2013. Investments reached the US$ 759 billion, that is, 52% of the total. There was an increase by 6.2% in relation to the previous year, driven mainly by Latin America and Caribbean and Africa, although emerging Asia is the bloc of developing nations that most received investments in nominal terms.
Investments in Latin America added up to US$ 294 billion, an increase by 18% in comparison to 2013. It was the fifth consecutive year of increases in the region, as per the UNCTAD report. According to the organization, the performance was influenced by the acquisition of the Mexican brewery Grupo Modelo for US$ 18 billion by the Belgium-Brazilian conglomerate AB InBev, which is the union of the Brazilian group Ambev, the Belgium Interbrew and North American Anheuser Bush.
Brazil, nonetheless, is still the main FDI receiver in the region, with US$ 63 billion last year, 3.9% less than in 2012. The information recently published by the Brazilian Central Bank (BC), however, is slightly different, indicating FDI flows greater than US$ 64 billion, with a 2.9% drop in relation to the previous year.
In global terms, Brazil was the seventh greatest destination for investments in 2013, whereas in 2012 it occupied the fifth position. The UNCTAD report emphasizes that, despite the decline, the sum received by the Brazilian economy is still “significant”, having followed “strong growth” and “historical highs” in previous years.
According to UNCTAD, expectations related to the end of quantitative easing in the United States, where the Federal Reserve injects dollars in the country’s economy, led to some volatility in the international market. The impact was strongly felt in some emerging countries, which suffered currency depreciation, stock market declines and foreign capital withdrawal. Brazil fits in with this scenario.
Africa
FDI flows in Africa also increased, by 6.8%, to US$ 56.3 billion. The highlight of North Africa was Morocco, which received US$ 3.5 billion, an increase by 24% in relation to the previous year. According to the UNCTAD report, it was the only Arab country in the continent to register a “solid growth”. The organization noted, however, that “there are signs that investors are ready to return to the region, with many big cross-border deals targeting Egypt.”
The Middle East, however, tells another tale. There was a decline in FDI flows for the fifth consecutive year. This time, investments decreased by 20% to US$ 38 billion. There were significant FDI reductions in the main destinations in the region: Saudi Arabia, by 19% to US$ 9.9 billion, and Turkey by 15% to US$ 11 billion.
“Turkey witnessed virtually a total absence of large FDI deals. In addition, the worsening political instability in many parts of the region have caused uncertainty and negatively affected investment,” reports UNCTAD.
The organization also highlighted the investments in the BRICS countries (Brazil, Russia, India, China and South Africa), the main emerging economies in the world, of US$ 322 billion, or 22% of the global FDI flow and twice the sum registered before the 2008 crisis. From 2012 to 2013, there was an increase by 21%. The greatest increase in all, by 126%, was registered in South Africa, and Brazil, which registered a decline in investments, was at the bottom of the list of bloc members in terms of performance from one year to the next.
Investments in developed economies, in turn, increased by 12% and reached US$ 576 billion, indicating a recovery process, according to the study. The sum, however, is still 44% lower than the record reached in 2007. The share of rich countries in global FDI flows, which was once the greatest, now adds up to 39%. FDI in the United States is still declining, but the country once again heads the list with highest foreign resources.
*Translated by Silvia Lindsey
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