Foreign direct investment (FDI) inflows in The Bahamas reached a five-year high in 2021, up 32 percent over the previous year, a new report released by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) reveals.
Overall, FDI in LAC rose by 40.7 percent in 2021 but had not returned to pre-pandemic levels, except for a handful of regional nations including The Bahamas which registered more than $1 billion in FDI.
“FDI inflows to The Bahamas were 32 percent higher in 2021 than in 2020, at US$ 1.185 billion, the highest amount since 2016. This result was mainly due to 67 percent growth in intercompany loans, which were the largest component of FDI for the second year running (67 percent),” the report notes.
“Equity inflows fell by eight percent and accounted for the remaining 33 percent. FDI project announcements in 2021 totaled US$ 43 million, compared to a total absence of announcements in 2020. The sector with the largest share was financial services, where the most notable announcement was of an expansion of the Royal Bank of Canada’s private banking operations in the country, worth a total of US$33 million.”
Within the Caribbean region, The Bahamas saw the fourth highest FDI injections behind now oil rich Guyana at $4.453 billion, Costa Rica at $3.563 billion and Dominican Republic at $3.102 billion.
Meanwhile, outward FDI flows from The Bahamas reached its lowest in 2021 at $66 million, from 2014’s peak of $2.679 billion and $157 million in 2020.
The authors of the report said given the growing complexity of the international landscape, it is becoming increasingly necessary to establish national and multilateral development strategies in the region and to coordinate public and private efforts so that Latin America and the Caribbean can better position itself in the global economic landscape.
“Much as in the rest of the world, foreign direct investment inflows to Latin America and the Caribbean rebounded in 2021 after dropping sharply the previous year. A total of US$142.794 billion was received, 40.7 percent more than in 2020. By contrast with the global situation, however, this growth was not sufficient to return investment to pre-pandemic levels. Moreover, FDI inflows amounted to 2.9 percent of GDP, which was still below the figure for the 2010s (3.5 percent),” they said.
“Considering that FDI inflows had already been on a downward trend since 2014, this weak recovery indicates how difficult it has been for the region as a whole to reposition itself as an attractive destination for the establishment of new operations by transnational corporations, since the cycle of booming commodity prices and high growth rates came to an end. Moreover, the Latin American and Caribbean share of total global inflows was nine percent in 2021, one of the lowest proportions in the last 10 years and well short of the 14 percent recorded in 2013 and 2014.”
