Driven by Privatizations, Foreign Investment in Brazil Grew 26 Percent in 2019

RIO DE JANEIRO, BRAZIL – Foreign Direct Investment (FDI) in Brazil grew 26 percent in 2019, according to data from the Global Investment Trends Monitor, released on Monday, January 20th, by the United Nations Conference on Trade and Development (UNCTAD).

FDI measures the capital invested by international investors in a country. It is considered by economists as the “good investment” since the resources go to productive capital (construction of factories, infrastructure, loans, and mergers and acquisitions).

The inflow of resources to Brazil rose from US$60 (R$320) billion in 2018 to US$75 billion last year. The figure was in line with what was expected by the banks’ analysts, according to data collected by the Central Bank in late 2018, through the Focus Bulletin.

The expansion of foreign investments, according to UNCTAD, came in the wake of the privatizations that took place mid-year, with the sale by Petrobras of its gas distribution subsidiary (TAG) .

The company was sold to the group formed by the French company Engie and the Canadian fund Caisse de Dépôt et Placement du Québec (CDPQ) for R$33.5 billion, approximately US$8.7 billion.

With the rise, Brazil climbed from ninth to fourth place among the main FDI destinations in the world – behind only the United States, China, and Singapore, according to the UNCTAD ranking shown above.

Global flow virtually stable

Worldwide, the global flow of investment has remained virtually stable compared to the revised 2018 data. Global FDI contracted by one percent, from US$1.41 trillion in 2018 to US$1.39 trillion last year.

For developed countries, foreign investment flow remained at historically low levels, dropping six percent from 2018 to US$643 billion. The drop was sharper in European Union countries, from 15 percent to US$305 billion, with a six percent drop in the United Kingdom as a result of the Brexit negotiations. The volume of resources directed to the United States remained virtually stable, at US$251 billion.

In the emerging economies, there was also stability in comparison to 2018, standing at an estimated US$694 billion. Within this group, however, there were divergent behaviors: while Latin America and the Caribbean saw an increase of 16 percent in the flow, Africa saw a more modest expansion of two percent, while Asia saw a drop of six percent – although it is still the destination of some 30 percent of global flow.

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