Argentina recorded a foreign direct investment (FDI) stock of $99.8 billion in 2021, 17% up from $85.3 billion a year earlier. In this way, it was located in the position 48 in the world rankingsl, well behind Mexico, Brazil and Chile in the region, according to data from the latest IMF poll of 112 countries that provided information.
The data is calling attention after a year of pandemic and in the midst of difficulties in attracting new investments. In fact, in recent years some companies sold or intend to sell their assets, as announced weeks ago by ENEL, owner of Edesur. For analysts, however, the greater stock of foreign investments is due to negative factors that They “swell” the statistics.
“If you look at the short term, foreign investment has grown in recent years, but in the long run we come much worse than the world. A lot is forced by demand, if they can’t leave, foreign companies buy real estate, warehouses, machinery and this artificially increases your stock, but even so compared to the rest of the world it gives you a bad feeling,” said the specialist Marcellus Elizondo.
According to the Fund’s report, of the $99,890 million accumulated by 2021, the top contributors were United States of America (US$20.1 billion), Spain (US$14.3 billion), Holland (12 billion US dollars), Brazil (US$5.3 billion) e Uruguay ($5.2 billion). However, the total stock remained well below Brazil ($517 billion) and Chile ($236 billion). This is what the assets of foreign companies were worth in 2021, many of which accumulated over several years.
IDEs consist of injection of foreign capital, reinvestment of profits and debt between companies. Analysts agree that the composition of the share increase is mostly due to the reinvestment of profits due to the impossibility of companies to transfer foreign currency abroad due to restrictions due to the lack of dollars or to the appreciation of the type of exchange .
“All the profits of the multinationals remain in the country due to the shares, which increase the stock of foreign investments because when they reinvest it, it is accounted for as a reinvestment of dividends, something forced because companies position themselves on rates or instruments linked to inflation and perhaps due to exchange rate appreciation, but the stock represents only 3 points of GDP,” said Andrés Borenstein, of Econviews.
FDI flows also show a low level: in 2021 they rose to $6,782 million, a volume that remains at the average level of the last 15 years, according to INDEC data. As for the title, Argentina is still a long way from the “top ten”. The United States is the main destination (almost 5 trillion dollars) followed by the Netherlands, China and Luxembourg, which in some cases can also be explained by “pure financial investments”, according to the IMF.
“The increase in the stock of foreign investment in Argentina in 2021 has to do with the higher reinvestment of profits due to the impossibility of remitting them with exchange controls (at least at the official dollar value) and, on the other hand, because the stock measured in dollars due to the appreciation of the real exchange rate, i.e. due to a rate of devaluation lower than the increase in local prices,” said Andrés Wainer, economist and researcher at the UBA.
Source: Clarin
