SANTIAGO, Chile (CMC) — The Economic Commission for Latin America and the Caribbean (ECLAC) says the region received US$194.2 billion in foreign direct investment (FDI) last year, or 1.7 per cent more than in 2024.

But ECLAC in its latest report said that in a scenario of great uncertainty and heightened global tensions, the results were uneven across destination countries and sectors.

ECLAC said that the relative weight of FDI in the region’s economies varies significantly between countries, but on average, the FDI received by the region as a share of gross domestic product (2.8 per cent) and gross fixed capital formation (14 per cent) held steady in 2025.

According to the annual report titled “Foreign Direct Investment in Latin America and the Caribbean 2026: Navigating the New Global Context”, the majority of countries in South America and Central America received more investment in 2025, whereas the dynamics in the Caribbean were heterogeneous.

After Brazil and Mexico, the countries receiving the most FDI in 2025 were Chile, seven per cent, Peru and Colombia, six per cent, Guyana five per cent and Costa Rica and the Dominican Republic, three per cent each.

ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, said in the current global context of weaponised interdependence, understanding the relationship between trade and FDI is key to designing policies that would allow the region to move towards more productive, inclusive and sustainable development.

“In Latin America and the Caribbean, the main difficulty lies, more than in a lack of instruments, in the coherent and strategic integration of trade, investment and productive development agendas, which limits the transformative impact that FDI could have in the region,” he added.

In 2025, reinvested earnings at 51 per cent remained the main component of FDI, despite declining year-on-year. It was followed by equity investment at 34 per cent of the total and intercompany loans at 15 per cent.

With regard to destination sectors, inflows into services (+19.5 per cent) and natural resources (+7.0 per cent) increased, while inflows into manufacturing (-17.2 per cent) declined. ECLAC said as a result, in 2025, services received 53 per cent of FDI, manufacturing 31 per cent and natural resources 16 per cent.

At the same time, 67 per cent of the investment entering the region in 2025, from identifiable sources, came from the United States (35 per cent) and Europe (32 per cent). However, the publication notes that less investment was received from the United States (-11 per cent) last year, while inflows from Europe increased.

As in the rest of the world, the highly uncertain environment had a particularly negative effect on investment announcements in the region, the report indicates.

Last year, 1,326 projects worth a total of US$114.1 billion dollars were announced in Latin America and the Caribbean, which represents a -10.2 per cent decline versus 2024 in the number of announcements and a -34.3 per cent drop in the dollar amount.

In contrast, FDI outflows from the region have recovered in the last three years, totalling US$62.286 billion in 2025, up 19.3 per cent from 2024 and reaching the second-highest figure since 2010.

ECLAC said public policies can play a key role in the effort to steer these investments so that they can create benefits in terms of productivity, technological learning, innovation and market access, while averting fiscal and production-related risks.

The report also analyses the ways in which FDI in the region may be affected by the recent changes to the United States’ tariff policies. The findings suggest that the region’s degree of exposure to changes in United States’ trade policy is highly heterogeneous across countries and sectors, and depends on each country’s production structure as well as its integration in regional value chains.

ECLAC said policies, institutions and capacities matter, and proposes that in order to navigate the new global context Latin America and the Caribbean need to diversify export markets and sources of FDI, particularly in economies in which a high share of total exports goes to the United States.

The region is also being urged to bring together trade, investment and productive development within a policy framework aimed at maximising the impact of existing investment as well as coordinate investment and trade promotion agencies with the bodies responsible for promoting other areas of productive development.

There is also a need to strengthen the technical, operational, political and prospective capabilities of investment and trade promotion agencies, and incorporate mechanisms for monitoring and learning in response to changes in the environment.