Foreign direct investment (FDI) in Latin America (LATAM) is set to increase next year, as strong commodity demand and competing US-China investments drive interest, according to a new report.
GlobalData’s FDI Trends in LATAM (2025) report says FDI projects are expected to grow by an estimated 1.8% in 2025. It credits this growth to the US’s increased interest in the region “to combat Chinese influence and consolidate supply chains”. However, it notes that the uncertainty caused by the US’s tariff regime could affect this outlook.
Smarter leaders trust GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
It also highlights conservative fiscal policies adopted by governments in the region, such as in Chile, Colombia and Peru, as drivers of growth. Specific examples include Argentina’s decision to eliminate export duties on around 88% of industrial products and Brazil’s Special Taxation Regime for Data Centre Services, which offers tax and import-duty exemptions on data centre equipment in exchange for R&D and sustainability commitments.
However, structural problems persist, as security issues have sharpened in some countries such as Ecuador, and “political fragmentation inhibits [LATAM’s] ability to collectively negotiate favourable FDI terms.”
Opened FDI projects in LATAM hit a high in 2024, recording 12,773 projects (the highest level in GlobalData’s FDI database). While US tariffs stunted FDI activity during the first half of 2025, there was a quarter-on-quarter 17% uptick in opened FDI projects in Q3. However, opened projects in 2025 are expected to wane at the present rate.
Brazil and Mexico are the region’s biggest FDI hotspots, accounting for 60% of the continent’s total announced projects between 2023 and 2025 year-to-date. Mexico has traditionally been a medium for US consumers, and Brazil has successfully attracted investment in various renewable energy and data centre projects.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIn terms of sectoral distribution, over a third (38%) of the region’s opened projects are in renewables and alternative power. Brazil and Chile dominate FDI inflows in this sector due to government policies and natural resources. Other prominent sectors include coal and gas (9%), and automotive (9%), for which Mexico accounted for nearly two-thirds of total opened FDI projects.
While FDI from most source countries declined from Q1 2024 to Q1 2025, the US continues to be the top source country for foreign investment in Latin America.
“Key factors for driving this investment from the US to Latin America include abundant natural resources, lower labour costs, connectivity and the region’s strategic importance for trade and supply chains,” the report notes.
It says that GlobalData’s FDI team is “cautiously optimistic” regarding the region’s FDI outlook, contingent on the region’s ability to combat inflation.
