Brasília – In May this year, foreign direct investment, which goes to the productive sector of the economy, totalled US$ 3.534 billion, the highest figure ever recorded for the month since the Brazilian Central Bank started keeping track, in 1947. The result exceeded the Central Bank’s projection, which was US$ 1.6 billion.
According to the head of the bank’s Economic Department, Altamir Lopes, investment by the chemical industry was expected in June, but took place in late June instead. This explains the fact that the estimate for May was so far from the actual result.
This month, the investment inflow will not be as strong. Up until today (22nd), direct investment totals US$ 900 million, and the expected figure for the whole month is US$ 1.5 billion. From January until May, FDI totalled US$ 11.414 billion.
The Central Bank’s projection for the year has been revised down from US$ 45 billion to US$ 38 billion. According to Altamir Lopes, the reduction is due to a change in global growth expectations.
“We had great expectations when we made our projections for 2010, and now we are revising them downwards, because the world economy bounce back late last year was milder than we imagined.”
Due to that same reason, the projection of Brazilian investment abroad has gone from US$ 12 billion to US$ 15 billion.
Foreign investment in bonds traded in Brazil totalled US$ 5.224 billion from January to May. Investment in fixed income bonds in the country totalled US$ 7.890 billion. According to data supplied by the Central Bank, the results show that the inflow has gone back to the level recorded in the first five months of 2008, when US$ 5.443 billion were invested in bonds traded in the country, and US$ 9.263 billion went to fixed income bonds.
Up until the 22nd this month, foreign investment in bonds traded in the country totalled US$ 1.419 billion, and fixed income in fixed income investment totalled US$ 1,064 billion.
Foreign direct investment and portfolio investment (bonds and fixed income) was enough to compensate for the current account deficit of US$ 18.748 billion recorded from January until May this year.
“We have very secure sources of financing, such as foreign direct and portfolio investment, which are behaving quite strongly, with high loan interest rates sustaining the current account deficit.”
Lopes added that the current account deficit is “driven” by the international travel deficit (spending by Brazilians abroad and foreigner spending in Brazil), expenditure on equipment rental, and transport.
“With regard to sales, the decline is a result of lower revenues due to interest. As international interest rates dropped, so did revenues from investment of international reserves, and Brazilian private sector loans also pay less,” he explained.
*Translated by Gabriel Pomerancblum
