Nearshore Americas

Dominican Republic Got a Major FDI Boost in 2023

The Dominican Republica and all of Central America saw a considerable surge in foreign direct investment (FDI) during all of 2023.

DR and Central American FDI increased by 16% in 2023, year over year, according to data from the Executive Secretariat of the Central American Monetary Council (SECMCA).

The Dominican Republic had the highest amount of foreign direct investment (FDI), totaling US$4.3 billion. This marks an increase of US$291 million, or 7%, from 2022.

El Salvador, Costa Rica and Honduras were the countries which saw the highest percentage growth.

Costa Rica followed with US$3.9 billion, representing an additional US$757 million, or a 23.9% rise compared to the previous year.

El Salvador’s crackdown on criminal gangs seems to be yielding substantial benefits. The Central American country saw a 340% annual increase in FDI.

Growth was significantly driven by the manufacturing industry and the transportation and storage sector, especially in the third quarter of the year, showcasing a significant improvement from the previous year.

In Costa Rica, 61% of FDI was directed to the free zone sector, reflecting an increase in interest from foreign companies to establish operations in the country. The definitive regime received 19% of the investment, while real estate and tourism garnered 7% each.

The US remained the leading source of FDI in Costa Rica, contributing 71% of the total investments.

Guatemala attracted US$1.5 billion, marking a 7.6% increase.

Nicaragua, in contrast to the rest of the region, saw a decline in its FDI flows. The country drew US$1.2 billion,  4.9% less than the previous year.

Honduras reported US$1 billion in FDI, with an increase of US$156 million, primarily from U.S. companies. In the final quarter of 2023, the Financial and Insurance Activities sector led investment in Honduras, attracting US$126.8 million.

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Growth was driven mainly by profit reinvestment by banking institutions and investments by non-residents in local bank capital shares.

Honduras’ manufacturing industry also performed strongly, with a flow of US$124.3 million, largely from net financing through intercompany debt, including accounts payable from beverage manufacturing and advances for coffee export.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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