U.S. investment in Latin America falls 11% as Europe gains ground, ECLAC says

June 24 (UPI) -- Investment from the United States in Latin America and the Caribbean fell 11% in 2025, although the country remained the region's leading source of foreign direct investment, the Economic Commission for Latin America and the Caribbean, or ECLAC, reported.

The organization presented its annual report, Foreign Direct Investment in Latin America and the Caribbean 2026: Navigating the New Global Context, in Santiago, Chile, on Tuesday. The report showed that the region received $194.233 billion in foreign direct investment in 2025, up 1.7% from the previous year.

ECLAC attributed the modest growth to an international environment marked by geopolitical tensions, technological rivalry among major powers and changes in U.S. trade policy.

The United States accounted for 35% of foreign investment with an identifiable origin entering the region, while Europe represented 32%.

ECLAC said the decline in U.S. investment flows and the increase in European investment significantly narrowed the gap between the two players.

The organization warned that recent changes in U.S. tariff policy could affect Latin American countries unevenly depending on their productive structures and their level of integration into regional value chains.

"In the current global context of weaponized interdependence, it is essential to understand the relationship between trade and foreign direct investment in order to design policies that allow us to advance toward more productive, inclusive and sustainable development," ECLAC Executive Secretary José Manuel Salazar-Xirinachs said.

During the presentation of the report, Salazar-Xirinachs also said the world had moved from a period in which economic interdependence was viewed as a source of efficiency and even a guarantee of peace to one in which it is increasingly perceived as a source of vulnerability, according to statements reported by Xinhua.

Brazil remained the region's leading destination for foreign investment, attracting $77.676 billion, equivalent to 40% of the regional total. Mexico received $43.221 billion, or 22% of the total, although it recorded a year-over-year decline. Together, the two countries accounted for 62% of all foreign investment received by Latin America and the Caribbean in 2025, according to ECLAC.

They were followed by Chile with 7% of regional flows, Peru and Colombia with 6% each, Guyana with 5%, and Costa Rica and Dominican Republic with 3%.

The sectoral composition also showed changes. Services attracted 53% of foreign investment received by the region and increased 19.5% from the previous year. Natural resources rose 7% and accounted for 16% of the total, while manufacturing declined 17.2% and represented 31% of investment flows.

The report also showed signs of caution among investors. During 2025, 1,326 new investment projects were announced with a combined value of $114.1 billion, a decline of 10.2% in the number of projects and 34.3% in value compared with 2024.

In response to this scenario, ECLAC recommended diversifying export markets and sources of investment, strengthening coordination between trade and investment policies, and expanding regional cooperation to reduce dependence on individual markets and increase economic resilience.