São Paulo – Brazil is not immune to infection from the economic turbulence that faces the rich countries and may suffer the consequences of a slowdown. However, it may also benefit from this problem and become a destination for investment that would be made in the developed economies if there were no crisis.
Figures disclosed this week by the Finance Ministry, including a Central Bank study, show that last year Brazil received US$ 66.7 billion in Foreign Direct Investment, a record value. In 2010, this investment in Brazil had reached US$ 48.4 billion and, in 2009, US$ 25.9 billion.
Figures disclosed by the United Nations Conference on Trade and Development (Unctad) and also presented by the Finance Ministry in document "Brazilian economy in perspective” show that Brazil was the fourth main receptor of foreign investment in 2011.
The country was only behind the United States (US$ 210.7 billion), China (US$ 202.4 billion) and the United Kingdom (US$ 77.1 billion) and ahead of other emerging nations, like Russia (US$ 50.8 billion) and India (US$ 34 billion). Still according to the study, the countries that invested most in Brazil in 2011 were the United States (18% of the total), Spain (15%), Belgium (9%) and the United Kingdom (7%).
If the current economic conjecture does not change in coming years, Brazil should continue being a destination for investment. According to the economist at Tendências consultancy, Bruno Lavieri, Brazil should receive greater investment in coming years as it has legal safety and does not offer risks to other developing nations.
Lavieri believes that Brazil may maintain the FDI level of 2011, a better forecast than that made by the Central Bank. The Central Bank forecasts that the country should receive US$ 50 billion in FDI in 2012, less, however, than in 2011, and a great crisis in Europe, resulting in greater aversion to risk. "Our forecast is a little more optimistic than that of the Central Bank’s.”
The coordinator of the International Business and Foreign Trade course in the Continued Education Programme at one of Brazil’s leading business colleges, Getúlio Vargas Foundation (FGV), Evaldo Alves, also forecasts that Brazil should continue as a destination for foreign investment. "Certainly, in coming years we will have similar investment [to that of 2011]. The cause is the crisis in developed economies, that should grow,” he said.
Alves also observed that this investment is "good" because the majority is not speculative flow, but funds for use in expansion of production. He observed, however, that Brazil may lose investment to other emerging nations.
"If we do not improve our logistics infrastructure, if we do not reduce or tax burden, we may lose to other emerging nations. China is our main trade partner. However, it is also our competitor,” he said.
*Translated by Mark Ament
