External investment dips from US$294M in 2012 to US$214M in 2013

DipsGeorgetown: Foreign Direct Investment (FDI) for Guyana shrunk sharply from a total of US$294 million in 2012 to US$214 million last year, the Economic Commission of Latin America and the Caribbean (ECLAC) said in its latest report on FDI in the region on Thursday.

The Commission said the most important development took place in the mining and oil and gas exploration sectors, mentioning the US$249 million Guyana Goldfields investment in the Aurora Gold Mine and Repsol and Tullow Oil plan to explore the Kanuku block. The report also made mention of the collapse of Government’s plan to build the Amaila Falls Hydropower station and the shelving of an ethanol plant. The report also stated that a Trinidad and Tobago firm – Citrus Growers Association plans to spend US$25 million in the country.

Meanwhile, ECLAC said Latin America and the Caribbean notched a new historic high in 2013 upon receiving US$184.92 billion in FDI, five per cent more than 2012’s figure in nominal terms. Global FDI flows climbed 11 per cent in 2013 from the previous year, and Latin American and Caribbean’s participation in the world’s total stayed at 13 per cent, said the “Foreign Direct Investment in Latin America and the Caribbean 2013” Report, presented Thursday at the United Nations organisation’s headquarters in Santiago, Chile.

FDI towards the region has grown steadily since 2003, with the exception of 2006 and 2009, although in proportion to the size of the economies, it has remained practically stable since 2011. This growth has been sustained by an increase in domestic demand and high prices for exports of commodities.

Economic expansion slowed

In the past two years, the economic expansion has slowed and metal prices have fallen, which is why ECLAC forecasts that FDI flows will diminish slightly in 2014. Despite this, the organisation notes that transnational companies still show great interest in the region’s long-term growth in consumption and in the exploitation of natural resources.

According to the study, 82 per cent of FDI flows go to the region’s six biggest economies, although in relative terms they have more impact in smaller nations, especially those of the Caribbean.  Brazil receives 35 per cent of the FDI that comes to Latin America and the Caribbean: in 2013, the country attracted US$64.046 billion, slightly below the level seen in 2012.

Central America drew 21 per cent more FDI than in 2012 while the Caribbean registered a 19 per cent decline (due to a specific operation in The Dominican Republic).