Brasília – Foreign direct investment, which goes into the production sector of the economy, reached US$ 2.2 billion up until Tuesday (23rd) this month, as informed by the Brazilian Central Bank (BC). As a result, the projection of the BC for the year, which was US$ 30 billion, has already been exceeded. From January until October, total investment has reached US$ 29.404 billion, as against US$ 19.235 billion in the first ten months of 2009.
The BC updates its projections for annual results every three months, and the next revision will be announced in December. In November alone, the BC estimates that foreign investment should reach US$ 2.8 billion. The figure reached US$ 6.771 billion in October – the highest result ever recorded by the BC during the period – and exceeded the forecast of US$ 5 billion.
"Towards the end of [last] month, we had an inflow of funds that was higher than we were expecting," explained the deputy chief of the BC’s Economic Department, Túlio Maciel.
According to Maciel, investment is spread throughout the economy, but a highlight is the metallic minerals extraction industry, in which the investment volume reached US$ 5.215 billion (15.2% of total investment), from January until October. Chemicals received US$ 6.594 billion in investment, a figure that accounts for 19.3% of the total figure.
Should the projected foreign investment be confirmed, then the result will not suffice to make up for the current account deficit, which concerns goods and services purchase and sale operations with foreign countries and is forecast to reach US$ 4.4 billion this month. Whenever this happens, the country resorts to other modes of financing, such as loans and portfolio investment (stock and fixed income bonds).
From January until October, the current account deficit was US$ 38.763 billion, as against US$ 15.079 billion in the same period of last year. The accumulated result accounts for 2.37% of all that the country produces – the Gross Domestic Product (GDP). Last month alone, the deficit was US$ 3.7 billion.
According to Maciel, the current account deficit is also influenced by increasing spending by Brazilians on foreign trips, transports "associated with import and export flows," and equipment rental. The sum of spending and revenues from transport from January to October was negative at US$ 5.370 billion. Equipment rental has recorded a deficit of US$ 11.065 billion during the same period.
*Translated by Gabriel Pomerancblum
