In the first half of the year, foreign investment in Brazil amounted to US$25.7 billion

RIO DE JANEIRO, BRAZIL – In the first half of this year, direct investment in the country (DDI) amounted to US$25.7 billion. The result was released by the Central Bank (BC) on Tuesday (27).

The figure exceeds that of the same period last year, which ended with US$23.7 billion. However, the Central Bank expects this investment to accelerate in the second half of the year, reaching US$60 billion by the end of the year. In 2020, the total was US$44.6 billion.

For June, the result was well below initial estimates. Only US$174 million came in. Last month, the Central Bank had forecast an inflow of US$2.5 billion.

The low result is a consequence of a withdrawal of US$2.4 billion in the month in inter-company business. In other words: subsidiaries of foreign companies in Brazil sent money to their parent companies abroad, or Brazilian companies sent money to their foreign subsidiaries.

This withdrawal offset the US$2.5 billion inflow that month.

Economists say the June IDP result raised the alarm because it may indicate that companies are not reinvesting resources in the country. The general opinion is that we will have to wait and see if this behavior continues in the coming months.

When multinational corporations do not reinvest their resources here and do not plan for long-term expansion of their operations in the country, it is a warning. However, such long-term planning and investment is what supports sustainable economic growth.

The head of the Central Bank’s Statistics Department, Fernando Rocha, said that everything indicates that this decline is a one-time thing.

He explained that the decision of Brazilian subsidiaries of multinational companies to move resources abroad is something normal and depends on several factors.

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