Foreign Direct Investment in Latin America and the Caribbean fell by 9.9% in 2023, according to the annual FDI report for the region by ECLAC. Almost every region in the world saw a decrease, with Global FDI dropping 2%, North America (-5%) and the European Union (-56%)
This fall in FDI in Latin America can be largely attributed to the decrease in FDI flows by Brazil (-14%) and Mexico (-23%), the two countries with the largest share.
From a sectoral point of view, the decline in FDI inflows was primarily driven by a 24% decrease in the service sector, which had performed strongly in 2022. Nevertheless, services continued to be the region’s top sector for FDI inflows in 2023 with 46% of total FDI inflows. Meanwhile, manufacturing investments saw a second consecutive year of growth, rising by 9% compared to 2022 to 34% of total. In the natural resources sector (19% of total FDI), FDI inflows increased by 16% over the previous year.
FDI in Panama fell by 22% in 2023 from the previous year to a total of US$2.327 billion, ranking 8th in Latin America in FDI inflows (19 countries). Down from a 45% increase the year before. Most other countries in Central America received more FDI, with 28% more for Costa Rica and 33% for Costa Rica. See the chart below for an overview.
In 2023, the number of project announcements in Panama rose to 24, approaching pre-pandemic levels, compared to 16 projects in 2022. However, despite the increase in announcements, the total value dropped from by 80% from US$ 4 billion to US$ 866 million, which is higher than only the values recorded in 2016, 2018, and 2021 over the last decade.
One of the major projects, valued at over US$ 200 million, was undertaken by MPC Energy Solutions (MPCES), which also revealed investment plans in Guatemala. MPC Energy Solutions focuses on developing new grid-connected photovoltaic panel projects and based in Amsterdam and listed on the Oslo Stock Exchange.
Press Release by ECLAC.
Download the full report Foreign Direct Investment in Latin America & the Caribbean 2024.