August 19, 2021
Investment

Foreign direct investment in Chile hit record high in first half of 2021

Foreign direct investment in Chile hit record high in first half of 2021
The Chilean Central Bank has released a revised version of its preliminary figures, showing that FDI increased 66% compared to the first half of 2020 to reach US$13.7 billion. This is an all-time high for the January-June period and is 98% above the historic average (US$7 billion).

Foreign direct investment (FDI) is going through a particularly dynamic time in Chile. According to figures released by the Chilean Central Bank, which revise a prior report issued on August 9th, the cumulative net FDI inflow was US$13.7 billion for the first six months of 2021. This is not only 66% higher than the first half of 2020, and far in excess of the total FDI recorded in 2020 (US$8.5 billion), but is also a record for the period.  

The cumulative figure for the first half of this year is the highest seen between 2003 and 2021, and is 92% greater than the average for the last five years and 98% higher than the average for the entire period from 2003 to 2021.  

Interestingly, the amount is even higher than the inflows recorded for the first half of 2012, during the so-called commodity supercycle.    

According to Economy, Development and Tourism Minister Lucas Palacios, “This is yet another indicator of our economy’s dynamism and the favorable projections at all levels. The figures we have been seeing show that growth is not based on one industry in particular. In addition to robust consumption, there is a YoY increase of 24.8% in fixed investment, with an important percentage of foreign capital. Broken down by sector, the largest share comes from personal services, retail and wholesale trade and the manufacturing industry. This solid economic recovery is no coincidence, but rather reflects the resilience of our entrepreneurs, the reactivation measures driven by the government and the improvements in the public health situation that are allowing for a gradual, albeit sustained and safe, opening of our economy. What foreign investors have seen and continue to see are the economy’s swift reactivation, the successful vaccination process and political and social processes taking place within our institutional framework. All of this means that we can look towards Chile’s future with optimism and confidence.”  

InvestChile Managing Director Andrés Rodríguez added, “This is a clear sign that foreign investment in Chile is going through an extraordinary moment, despite the pandemic. Although we must be cautious with these figures since foreign investment can change from one month to the next, we’re getting a clear picture that foreign companies trust Chile and are actively developing their projects in our country. This is fundamental, because their contribution is key to the recovery of economic activity in general, and to job creation in particular,” he asserted.   

Benefits of FDI for Chile  

This month InvestChile presented its report “The Nature and Effects of FDI in Chile,” in which it describes the benefits that foreign investment is bringing to the country. The agency highlighted that 64,680 companies in Chile are financed with foreign capital, which represents 9.6% of all companies. The report mentions that foreign companies contribute 40% of annual production investment and 51.4% of total tax revenue. The report also mentions that foreign companies made 66.7% of the goods exported from Chile during 2019, and provided 85.3% of the services it exported.  

The full document can be downloaded at www.investchile.gob.cl.