Foreign direct investment (FDI) flows to Peru will increase from US$6.8 billion in 2017 to US$8 billion this year, Citibank Chief Economist for the North Andean Region Munir Jalil projected Wednesday.
He said that regardless of the threat of trade war between the United States and
China, money flows continued to enter the Latin American region —including Peru—and to position themselves. In fact, money will continue flowing.
"For this year, we expect foreign direct investment (FDI) —mainly that associated with mining projects— will increase due to a positive outlook for (metal) prices. In the first instance, we expect US$8 billion for 2018, which would be close to the level recorded in 2015," he pointed out.
Foreign direct investment in Peru has increased substantially since 2001 when it registered US$1.1 billion. In 2012, FDI reached a peak of US$11.8 billion but then decreased over the years reaching US$6.8 billion
in 2017.
Jalil said that given the better price prospects for metals exported by Peru —such as
copper and gold— capital investments in the mining sector will see an increase.
He also explained that higher dollar-denominated income prevented the exchange rate from depreciating more than it did, in a context in which it could potentially have been affected by political risk.
However, there were flows and an improvement in the supply of the U.S. currency.
"What's more, the surprise could occur at the end of 2018, with a potential increase in this (capital) flow, because such investment —mainly the one tied to the mining sector— is quite insensitive to political issues," he added.
(END) MDV/RMB
Published: 4/18/2018