Foreign Investment Drying Up Thanks To Covid-19; But There May Be A Silver Lining

Just over a year ago, InvestChile – the South American country’s Foreign Direct Investment Promotion Agency – welcomed 300 foreign investors of 21 nationalities in Santiago. In a two-day event, they attended plenaries, workshops, and over 200 meetings including with the president, advancing over US$ 7 billion in potential projects.

- Cristián Rodriguez Chiffelle And Peter Vanham

Fast-forward to today, and the view from Chile could not have changed more radically.

FDI roadshows in Santiago, and every other capital, are a picture of the past. InvestChile’s work shifted almost overnight. In confronting the coronavirus emergency, priorities changed: from attracting FDI overseas to deploying a crucial domestic effort to help international companies ensure their business continuity in Chile, thus keeping the economy running.

Uncharted waters

This is not an isolated case. All over the world, foreign investors are navigating uncharted waters. The COVID-19 pandemic is leaving not only desolation for the lives that are being lost, but also many questions about the post-coronavirus economy, such as how global investment flows will behave as the emergency clears.

Among all the issues that matter right now, FDI should not be forgotten: It has historically been a barometer of health of international companies, and their ability to bring about global growth. With the current freezing over of foreign investments, a spectre looms on the horizon once the health emergency subsides: a deeper economic recession to confront.

There is a possible silver lining: Investors attracted by good value may kickstart a ‘virtuous cycle’, fresh capital in one sector benefiting the next, as soon as economies open again. After all, one should never let a good crisis go to waste.