FDI shows good perspective for 2017 in Brazil

As the Brazilian economy is at a slow pace of recovery, an important economic index seems to be not affected by the ongoing financial and political crisis of the last 3 years. The FDI – Foreign Direct Investment – has had optimistic results in 2016 with the total of U$ 78 billion injected in the country. For 2017, the Brazilian Central Bank estimates that the index will maintain at the average of U$ 70 billion, which is a positive signal whereas the analysts projected 2017 as the year that Brazil will bail itself out from the economic crisis.

The reasons the FDI has been stable in a global context which the great leaders have lost positions in the ranking is a very Brazilian combination of high national interest rate, cheaper companies that facilitated the trade in M&A markets – though the M&A index has decreased in the last couple years – the assets trade plans of Brazilian companies , the profit reinvestment from Brazilian subsidiaries and intercompany loans from foreign headquarters as a way to sustain the global operation of such companies.

Taking a closer look at the performance of Brazil on the BRICS, the group has faced a strong reduction on the global share of FDI to 15% in 2015 which unveils an important information regarding FDI index: India, for instance, which has been growing at a GDP rate of 7% and larger than China, was behind Brazil and only on the 10th global position. Brazil has kept its 6th position in 2016 as UNCTAD report. Numbers have shown that within the BRICS, though the GDP rates is generally low compared to other countries, Brazil is still consistent regarding foreign investment because of the perception of institutional security, unlikely China or Russia, and the consistency of merging and large consumer market in Brazil.