Brasília – Foreign Direct Investment (FDI) in Brazil should reach US$ 7 billion this month, according to a forecast disclosed on Tuesday (24) by the Central Bank of Brazil. Up to last Friday (20), the investment reached US$ 6.3 billion.
In June, FDI reached US$ 5.822 billion and accumulated US$ 29.72 billion in the first half. For the whole year, the Central Bank forecast, which may be exceeded, is US$ 50 billion.
According to the joint head of the Economic department at the Central Bank, Fernando Rocha, the forecast for this month takes into consideration specific investment of US$ 1 billion. Rocha pointed out that in June there was no operation over this volume, and there were diffused flows of several values and in several sectors of the economy.
In the first half of this year, FDI was more than enough to cover the deficit in current account transactions (the record of purchases and sales of goods and services), which was US$ 25.342 billion. To Rocha, “it is not surprising” that FDI continues covering the negative balance of foreign accounts this year.
The current account deficit shows that the country spent more than revenues with economic relations with the world and, for this purpose, it is necessary to finance the negative result. One of the possible ways is receiving foreign direct investment, which, when not enough, results in the country borrowing money or receiving investment in shares and fixed income papers.
Rocha recalls that financing through FDI is important as it is long-term investment. “Foreign accounts present a sustainable trajectory while the deficit as against GDP (Gross Domestic Product) presents small or moderate results and is financed by long-term capital,” he pointed out.
In the first half, the deficit in current account transactions as against GDP was 2.21%. Regarding FDI, this relation was 2.59%, exceeding the country’s financing needs.
*Translated by Mark Ament
