Spain, the world's second largest destination for Latin American investment and gateway to Europe
Presentation of the Global LATAM 2021 report promoted by ICEX-Invest in Spain with SEGIB
The volume of Latin American investment in Spain recovered in 2021 after the pandemic lull. 1.044 billion euros were invested, up from the previous year's figure of 1 billion euros. The highest ever number of greenfield projects commissioned by Latin American stakeholders was also achieved. Spain is thus consolidating its position as the world's second largest destination for Latin American investment outside the region, behind only the United States, and it is the main gateway for Latin American capital entering the European market.
These are some of the data that emerge from the Global LATAM 2021 report, the fourth in the series promoted by ICEX-Invest in Spain with the collaboration of the Ibero-American General Secretariat (SEGIB), and which was presented at an event inaugurated by the CEO of ICEX Spain Export and Investment, María Peña, and the Secretary General of the SEGIB, Andrés Allamand.
In her speech, María Peña highlighted the importance of this study as "the only one that carries out exhaustive, regular monitoring of this important economic reality", helping ICEX "design and implement initiatives that allow it to continue to improve Spain's positioning as a destination for Latin American capital."
The Secretary General of SEGIB, for his part, Andrés Allamand, underlined that the report complements the traditional vision of the region by focusing on outward investment from Latin America to the world. "After the fallout from the pandemic, our region is now positioned as an active and attractive player for investment in potential host countries. Our mission today is to continue working to face the challenges of the global situation and to encourage investment by and in Latin America," he said.
Latin American companies constitute a fundamental part of the Spanish business fabric. The region's overall accrued investment in Spain is 47.168 billion euros — 63.332 billion if investments in holding companies are included — which represents 9.8% of all foreign investment in Spain. The trend is also experiencing strong growth, as investment has risen by 92% since 2010. Only the United States, the United Kingdom and France have invested more in Spain than Latin American companies, with a greater volume of investment than other middle-income economies, such as China.
According to the report, it is expected that Latin American companies will continue to invest heavily in Spain in the coming years due to several factors: the macroeconomic and institutional stability offered by the country, the possibility of building a global brand from Spain, and access to technology and knowledge networks.
Global investment of 57.403 billion dollars
Similar to the trend in Spain, foreign investment by Latin American companies globally increased to USD 57.403 billion last year, according to data from Global LATAM. This is one of the highest figures in history, as well as being 25.5% higher than pre-pandemic levels.
As for startups, Latin America has seen an explosion in recent years of new technology companies with clear global ambitions. According to a study by the Inter-American Development Bank (IDB), there are currently 1,005 start-ups established in the region, with a value of over 100 billion dollars and 245,000 employees, and they are present in practically all sectors of the Latin American economy. Prominent examples are Rappi (food delivery, Colombia), Nubank (fintech, Brazil), Kavak (used car buying and selling, Mexico), Despegar (tourism, Argentina) and Betterfly (telemedicine, Chile).
According to the Global LATAM report, these companies are leading a new wave of investment abroad. Looking ahead for 2022, the study points out that the outlook for foreign investment is characterised by high uncertainty, due to the process of emerging from the pandemic and other internal economic or social factors, such as the rise in interest rates in the region, the upward trend in inflation and the elections that will take place this year in countries like Brazil and Colombia.
First Global LATAM Barometer
As a new feature for this year, the report includes the results of the first Global LATAM Barometer, carried out in collaboration with the Ibero-American Business Council (CEIB). The Barometer analyses the current perception of the Latin American economy by companies in the region, 79.2% of which have a neutral or negative assessment. Among other aspects, they were also asked about their international investment forecasts, and 34% of the companies indicated that they plan to start operations abroad in 2022, while 28.8% expect to increase them. The main destinations for investment will be Latin America itself (46.6%), the United States (26.9%) and Spain (9.8%).