The United Nations Conference on Trade and Development (UNCTAD) is reporting that Foreign Direct Investment (FDI) in the Caribbean declined by 36 per cent last year amounting to US$1.4 billion.

In its annual World Investment Report 2021, UNCTAD reports that FDI inflows to Small Island Developing States (SIDS) like those in the Caribbean fell by 40 per cent to $2.6 billion. The Bahamas, Barbados and Grenada, realized increased FDI inflows during 2020, even though FDI flows plunged globally by 35 per cent because of the economic crisis caused by the COVID-19 pandemic.

The top five host economies cited were The Bahamas, Jamaica, Maldives, Barbados and Mauritius, which accounted for four-fifths of the total FDI inflows to the group. Inflows to the 10 Caribbean SIDS dropped 36 per cent to $1.4 billion.

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 $897 million, Barbados by 22 per cent to $262 million and Grenada by 11 per cent to $146 million.

Jamaica and St Kitts experienced FDI contraction

However, Jamaica and St. Kitts & Nevis experienced contractions in FDI receipts of 45 per cent and 47 per cent respectively. The Bahamas was one of only seven Small Island Developing States (SIDS) that saw increased inflows for foreign direct investment (FDI) during 2020.

The report noted that FDI suffered in tourism, where only a handful of projects survived the collapse of international travel, and in natural resources. In The Bahamas, inflows grew by 47 per cent to US$897 million, despite the contraction of the domestic economy and tourism.

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, Bahamas Minister of State for Finance, Senator Kwasi Thompson said the country demonstrated the 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 COVID-19 pandemic, investors maintained a strong level of confidence in the Bahamian economy.

Sustained investor confidence in The Bahamas

“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.

According to the minister, “As the Bahamian economy rebounds, the government’s articulated Accelerated Bahamas Recovery Plan has placed a renewed focus on prioritizing public and private sector investment. Under this administration, The Bahamas will continue to improve its investment framework, to ensure that domestic and foreign investment inflows will remain healthy and strong over the medium and long term, resulting in more employment opportunities for Bahamians.”