The United Nations Commission on Trade and Development (UNCTAD) is reporting that foreign direct investment (FDI) to the Caribbean declined by 36 per cent last year, amounting to US$1.4 billion.
In its annual World Investment Report 2021, UNCTAD says FDI inflows to small island developing states (SIDS) fell by 40 per cent to US$2.6 billion. The top five FDI host economies cited were The Bahamas, Jamaica, Maldives, Barbados and Mauritius, which accounted for four-fifths of the total FDI inflows to SIDS.
However, Caricom countries The Bahamas, Barbados and Grenada realised increased FDI inflows during 2020, even though FDI flows plunged globally by 35 per cent because of the economic crisis caused by the novel coronavirus pandemic.
“These economies continued to account for more than half the inflows to SIDS,” the report states.
FDI inflows to The Bahamas grew by 47 per cent to US$897 million, Barbados by 22 per cent to US$262 million and Grenada by 11 per cent to US$146 million.
There were also increases for Comoros, the Marshall Islands, Palau, Samoa and São Tomé and Príncipe.
According to the report, “FDI suffered both in tourism, where only a handful of projects survived the collapse of international travel, and in natural resources.”
However, Jamaica and St Kitts & Nevis experienced contractions in FDI receipts of 45 per cent and 47 per cent, respectively.
The report also noted that reconstruction works, following the ravages of Hurricane Dorian in 2019, and investment in ICT services continued in 2020.
Speaking to the results in the report, The Bahamas’ minister of state for finance Senator Kwasi Thompson celebrated his country’s strongest level of FDI receipts among global SIDS.
He pointed out that the study highlighted the core message that despite the severe global economic downturn associated with the pandemic, investors maintained a strong level of confidence in the Bahamian economy. The minister further contended that “this is perhaps the strongest indicator of the enduring and sustained confidence that investors have in The Bahamas”.
“It cannot be taken for granted that during these challenging times investments are not only continuing, but increasing. This is evidence that we are headed in the right direction and motivates us to redouble our efforts until full recovery,” Thompson said in a statement.
He argued that “as the Bahamian economy rebounds, the Government’s articulated Accelerated Bahamas Recovery Plan has placed a renewed focus on prioritising public and private sector investment.