The Diplomat
Latin America has become in the last decade the fourth largest investor in Spain and our country has become the second world destination for Latin American investments outside the region, according to a report by ICEX and SEGIB presented yesterday.
According to data from the third edition of the Global Latam 2020 report, promoted by ICEX-Invest in Spain with the collaboration of the Ibero-American General Secretariat (SEGIB), the accumulated investment by Ibero-America in Spain now stands at 42,663 million euros, 61,104 million if investment in holdings is included. Since 2010, Latin America has invested 3.8 billion on average annually in Spain and has become the fourth largest investor in Spain, behind only the United States, United Kingdom and France, and ahead of countries such as Germany or China.
According to the report, Spain represents a long-term investment destination for Latin American capital thanks to its macroeconomic and institutional stability, and is increasingly becoming the gateway to the European market for Latin American companies. Spain is also the world’s second largest destination for Latin American investment, behind only the United States and well ahead of other European economies, accumulating a greater number of investment projects than Germany, France and Portugal combined.
Despite this, the investment Spain received in 2020 from Latin America (968 million euros) was “substantially lower” than in 2019 and similar to that of 2018. This is a decrease of 38.4% compared to the annual average of Latin American investment in Spain over the last ten years. This drop, in any case, is lower than that experienced by Foreign Direct Investment (FDI) worldwide, estimated at 42% by UNCTAD.
In addition, the data on productive investment contrasts with the high investment activity of Latin American holding companies, which are very present in Spain. Specifically, this type of operations grew by 152% in 2020 compared to 2019. This high activity of financial flows in holding companies reflects the growing importance of Spain as a gateway for Latin American investment in third destinations, especially European ones.
The study also reveals that Latin American investments in the world showed significant resilience during the COVID-19 era, despite Ibero-America being one of the regions hardest hit by the pandemic. It also shows that outward investment by Latin American companies is a phenomenon of growing importance. Companies in the region currently have $765 billion in investment stock beyond their borders and in recent years, in a context of weak economic growth in the region, there was a significant increase in Latin FDI in the world, 69% over 2011 figures.
“Latin American companies are called to play a leading role in the recovery from the COVID-19 pandemic, and there are several reasons for optimism”, said SEGIB Secretary General Rebeca Grynspan yesterday during the presentation of the report. “One of them is that the region has had ‘forced innovation’ during this crisis. From e-commerce to e-learning, from telemedicine to telework, we have seen years of progress in just months”, she continued. Another reason, she said, is that “the pandemic has catalyzed the green transition”. “We have pioneering companies in the sector with great potential for expansion, and a population that is aware and concerned about climate change”, she added.
For her part, the CEO of ICEX, María Peña, reported during the same event that the third edition of the report has included “an analysis of the impact of COVID-19 that has allowed us to observe an uneven behavior in the investments of the different countries”, and it has been possible to identify that “many of the investment operations of Latin American companies have not been canceled, but are being retained while waiting to observe the economic evolution and the health situation in this 2021”.
