IDB’s 19.5% Export Surge Exposes Latin America’s Investment Gap

Latin America and the Caribbean’s goods exports rose 19.5% in the first half of 2026, according to the Inter-American Development Bank’s (IDB) November 3 report.

Mexico recorded strong growth in shipments of artificial intelligence infrastructure equipment to the United States, while higher energy and mineral prices lifted export earnings in South America and the Caribbean.

The region accounted for a record 22.1% of US imports during the period. However, foreign direct investment received between 2023 and 2025 was 4.5% below the level recorded in 2012–2014, according to the IDB. Latin America’s share of global FDI stock also declined from 7.1% to 6.0%.

Regional FDI inflows reached $194.2 billion in 2025, an increase of 1.7%, according to the Economic Commission for Latin America and the Caribbean (ECLAC).

Services received 53% of investment, compared with 31% for manufacturing and 16% for natural resources. Reinvested earnings accounted for more than half of inflows, while new equity investment represented 34%.

Companies announced 1,326 investment projects worth $114.1 billion in 2025. The number of projects declined 10.2% from the previous year, while their combined value fell 34.3%.

The decline in new project announcements comes as export growth creates additional demand for manufacturing capacity and the infrastructure supporting international trade.

Latin America’s Export Boom Opens New Investment Opportunities

Flex announced a $1 billion investment in Mexico in April 2026 to expand manufacturing for artificial intelligence data centres through 2028.

The programme covers facilities in Jalisco, Aguascalientes and Chihuahua, with more than 5,000 direct jobs projected. The company already employs approximately 40,000 people in Mexico, where its expansion includes manufacturing, automation and testing capabilities for specialised computing equipment.

Costa Rica’s medical and precision equipment exports reached $7.29 billion during the first eight months of 2026, accounting for 46% of merchandise exports.

In September, Forj Medical opened a $15 million factory in Alajuela, equipped with automated production lines and cleanrooms for medical-device manufacturing. The facility adds production capacity to an industry supplying international healthcare markets.

In Argentina, IDB Invest agreed to provide financing of up to $60 million for Interpack, part of Grupo HZ, to establish a corrugated cardboard packaging factory in Buenos Aires Province.

The financing includes a committed tranche of up to $40 million and an additional uncommitted tranche of up to $20 million. The facility will manufacture packaging for food producers, industrial businesses and e-commerce companies.

The investments cover different parts of Latin America’s export industries, from AI computing equipment and medical devices to packaging used by manufacturers.

Flex and Forj Medical have announced or opened production facilities, while Interpack’s development is supported by committed financing. Their progress will depend on the completion of planned capacity and the demand available to each business.

Foreign Direct Investment Gaps Limit Industrial Expansion

Mexico received nearly $35 billion in foreign direct investment during the first half of 2026, but new investment accounted for just 7.8% of inflows.

New capital commitments declined 13% from a year earlier, while uncertainty over the United States–Mexico–Canada Agreement prompted manufacturers to reconsider planned factory expansions.

Atlas Renewable Energy suspended approximately $1 billion in planned projects in Brazil in June after electricity grid restrictions affected its operating facilities.

The company, owned by BlackRock’s Global Infrastructure Partners, reported that some plants were unable to deliver 15%–25% of their potential electricity output during the quarter, reducing revenue from existing operations.

In Chile, AES Andes cancelled its INNA green hydrogen and ammonia project in January, shifting planned expenditure toward renewable electricity and battery storage.

State development agency Corfo revised its hydrogen support programme in June, citing high production costs, financing difficulties and insufficient demand from industrial buyers.

Lithium Argentina is proceeding with a smaller initial expansion at its Cauchari-Olaroz operation. A September study estimated approximately $1 billion in initial capital requirements for the proposed addition of 45,000 tonnes of annual production capacity.

The company is targeting regulatory approvals in the first half of 2027, while Chinese authorisation for the export of processing technology remains outstanding.

Trade Agreements Reshape Latin America’s Manufacturing Investment Prospects

The EU–Mercosur interim trade agreement entered provisional application on May 1, 2026, covering Argentina, Brazil, Paraguay and Uruguay.

The European Commission confirmed that tariffs on machinery and appliances, previously ranging from 14% to 20%, will be progressively reduced for most covered exports over ten years. Automotive products and components are also subject to scheduled tariff reductions, with different rates and implementation periods.

The agreement establishes new market-access conditions for European manufacturers supplying Mercosur and for South American exporters seeking customers in the European Union. The applicable tariff schedules and rules of origin will determine which products qualify for preferential treatment.

The Inter-American Development Bank’s Trade and Integration Monitor 2026 identifies bilateral investment treaties, double taxation agreements and trade agreements containing investment provisions as factors associated with a greater likelihood of cross-border investment relationships. Its findings place regulatory arrangements alongside market access in the region’s efforts to attract foreign capital.

The IDB also identifies domestic regulatory conditions as relevant to investment decisions, including licensing requirements and taxation.

The EU–Mercosur agreement has entered provisional application, but the extent of additional manufacturing investment associated with its implementation has not yet been established.

Export Growth Puts Latin America’s Infrastructure Financing Under Pressure

Latin America and the Caribbean need approximately $1.6 trillion in infrastructure investment between 2025 and 2030, according to an August 2026 study by the Inter-American Development Bank (IDB).

Annual spending would have to reach 3.53% of regional GDP, compared with an average of 1.7% between 2015 and 2023. Transport accounts for 40% of the estimated investment requirements.

Governments from 18 countries presented 145 transport projects worth approximately $84.4 billion at a September investment forum in Miami. The proposals cover roads, ports, waterways, railways and freight facilities, with financing and procurement arrangements still being developed.

Development bank CAF approved financing of up to $200 million in October for Colombia’s La Dorada–Chiriguaná railway corridor. The public-private partnership involves Ortiz Construcciones y Proyectos, Transferport and Colombian Natural Resources. Funding will support railway rehabilitation, equipment purchases and operations along the freight route.

The investment pipeline remains considerably larger than the financing committed to individual projects. Transport developments presented at the Miami forum have yet to secure funding and reach construction, while the Colombian railway has obtained development-bank approval for part of its financing.

The pace at which these projects move into operation will influence the transport capacity available to businesses expanding production for regional and international markets.