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Jair Bolsonaro e o ministro da Economia, Paulo Guedes

Under the neoliberal Bolsonaro and Guedes, Brazil receives the lowest direct investment inflow in five years

According to central bank data, net direct investment inflows into Brazil fell to $174 million in June, the lowest monthly level in five years.

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by Isabel Verciani

Brasilia (Reuters) – The net inflow of direct investments into Brazil (IDP) fell to 174 million dollars in June, the lowest monthly level in five years, under the influence of reducing loans made by the headquarters of foreign companies to their subsidiaries in the country, data released on Tuesday by the Central Bank shows.

Investments in fixed income, equities and mutual funds posted a new month of strong inflows of $5.1 billion, confirming a rebound in portfolio inflows after last year’s hit amid the pandemic crisis.

The monthly data for IDPs was the lowest since July 2016 ($-103 million) and contrasts with the positive inflow of $5.164 billion in direct investment in June 2020. But the partial figure for this month already indicates a recovery in inflows, and inflows. Of the direct investments in the first four months were revised upwards.

According to the British Columbia Federation, data in June was affected by the flow of $2.3 billion in intercompany operations, reflecting a decrease in payments for intercompany credit operations. The calculation of reinvested profits in the country was also negative, as companies chose to send more money to their headquarters than the profits earned per month.

The head of the British Columbia Statistics Department, Fernando Rocha, said the results were “normal,” noting that he did not see a reversal in the expected growth trend of the displaced for this year.

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In the first half of the year, IDP flows exceeded those recorded in the same period in 2020, reaching $25.691 billion, compared to $23.724 billion last year. For July, BC estimated the number of internally displaced people at $4.7 billion, based on preliminary data.

Portfolio investment accumulated $44.6 billion in inflows in 12 months. In June 2020, this account, which is traditionally more volatile than IDPs, recorded outflows of 47.6 billion riyals in 12 months.

Current Transactions

The country’s current account surplus came to $2.791 billion in June, down from the $3.5 billion analysts had expected, according to a Reuters poll.

Within 12 months, the country still accumulated a deficit of 1.27% of GDP in its exchanges with abroad.

Data on offshore accounts for the first four months of this year and for 2020 were reviewed by British Columbia, taking into account information provided by companies in an annual survey on Brazilian capital abroad.

The regular review increased the current account deficit from January to May by about $3.6 billion, while the displaced increased by $3 billion.

The influx of displaced people for the whole of 2020 increased by $10.5 billion to $44.7 billion, while the current account deficit increased by $1.8 billion to $24.1 billion.

(With additional reporting by Camila Moreira)

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