Latin America is showing strong signs of recovery in 2011 with impressive growth in FDI project numbers for the first and second quarters. In the first half of 2011, 702 projects have been recorded into the region, compared with 1081 for the whole of 2010. In fact, Q1 and Q2 figures for Latin America are larger than those generated in 2005 and 2006, which recorded 548 and 576 projects, respectively.

Should the second half of 2011 perform as strongly, Latin America could better its previous record of 1115 projects in 2009. Capital investments into such projects are following the same pattern with capital expenditure for the region in 2011 already up to 70% of the 2010 figure.

Advertisement

The top destinations in the region are Brazil and Mexico, which account for 55% of all FDI so far in 2011. Ecuador is also experiencing growth, having attracted more projects so far in 2011 than it won in either 2010 or 2009.

Major investments in the region include Wales-based Mir Steel UK’s $5bn joint venture with Brazilian steelmaker Cosipa for a steel project in Barcarena, Brazil, and Mexico-based America Movil’s $180m investment to expand the network coverage of its Ecuadorian subsidiary, Porta.

According to information provided by fDi Benchmark, the Brazilian economy grew by 7.5% (constant prices) in 2010. Real growth in Mexico was 5.5%. Forecast annual growth for 2011 is 4.5% in Brazil and 4.6% in Mexico, higher than the 2.8% forecast for both the US and Canada. The Latin American economy is forecast to grow by 4.7% in 2011. The highest growth economies are expected to be Peru, Panama, Argentina and Chile.

The Brazilian economy is the largest in Latin America. Sectors that experienced particularly high growth last year were mining, construction, transport, and business and financial services. High growth in these sectors has helped to attract foreign investment. FDI projects in the first half of 2011 were concentrated in communications, software and IT, business and financial services, and the industrial sector. In Mexico, the transport, and information and communications technology sectors attracted the most FDI.

FDI has created a large number of jobs in Latin America in 2011 so far. According to fDi Markets data, more than 100,000 jobs have been created in Brazil and more than 40,000 in Mexico.

Unemployment rates have fallen in metropolitan areas of Brazil, from 7% in June 2010 to 6.2% in June 2011. Unemployment in Ecuador was 6.4% in June, down from 7.7% in 2010; an estimated 600 FDI-related jobs have been created this year so far. In Mexico, however, unemployment increased in June compared with the year before, by 0.5%. Despite FDI generating employment, job creation in Mexico remains low.