International money continued to flow into Central America and Panama last year, in sharp contrast to the rest of Latin America.
Led by Panama’s economic strength, investment in Central America rose 6 percent in 2015 to $11.8 billion, compared to a 9.1 percent drop for Latin America and the Caribbean, according to new data released this week by the Economic Commission for Latin America and the Caribbean (ECLAC). Panama accounted for the largest chunk of the Central America growth—43 percent—compared to 26 percent for Costa Rica and 10 percent for Honduras.
Investment in Panama is fueled by solid economic growth across sectors, including large scale infrastructure projects, such as the Panama metro, expansion of Tocumen airport and new roads.
But many other countries are not faring as well as Panama. Foreign investment in Brazil dropped 23 percent in 2015, as economic turmoil engulfed the country, the Chile-based ECLAC reports. Investment in Chile dropped 8 percent and 26 percent in Colombia, in large part due to declines in mining operations.
The research found that international investment, overall, is expanding at a rapid rate. Total global FDI flows grew 36 percent in 2015, to about $1.7 trillion dollars, due in large part to an increase in mergers and acquisitions.
The United States was the top investor in the region, according for 25.9 percent of the total, followed by the Netherlands (15.9 percent) and Spain (11.8 percent).
Foreign investment is a key driver for local economies, ECLAC said in its report.
“With proactive and integrated policies, countries can take advantage of these flows to diversify their economies, boost innovation and the incorporation of technology, and respond to the challenges of the 2030 Agenda for Sustainable Development,” ECLAC Executive Secretary Alicia Bárcena told a press conference.
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