Foreign investment in Brazil’s productive sector down 12.4% in 2020

Amid the COVID-19 pandemic, the stock of foreign investments in Brazil’s productive sector declined 12.4%—BRL 108.5 billion—in 2020. The data can be found in the Direct Investment Report, published today (Dec. 22) by the Central Bank.

Last year, direct investment in the country totaled $765.4 billion, compared to $ 873.9 billion in 2019. According to the financial institution, the decline can be chiefly explained “by the variation in exchange parities,” which stood at a negative $140.1 billion. Net investment inflows added up to US$ 33.4 billion—below recent yearly averages, due to the effects of the pandemic, the Central Bank argued.

Most of the investments last year fell under capital participation, US$ 521.3 billion. This modality includes, for example, the purchase of new companies and reinvestment of profits raised in the country. The remainder $244.1 billion stemmed from inter-company operations, such as loans from parent firms directed at their branches in Brazil.

As for sectors under economic activity, services concentrated 59 percent of investments in capital participation, especially in financial services (21%). Next come industrial sectors, with 30 percent of the investments, followed by agriculture, livestock, and mineral extraction, with ten percent of resources invested in Brazil.

Direct investment abroad from Brazilians outside the country, however, added up to US$ 447.9 billion in 2020—$411.5 billion in capital participation, $36.4 billion in inter-company transactions. Direct investment abroad in 2020 is the highest value in this time series, up $31.4 billion from 2019’s $416.5 billion.

In 2020, the profitability of companies under both investment types reached 5.3 and 3.2 percent respectively, lower than 2019.

The figures from the Direct Investment Report were collected as part of a survey by Brazilian Capital Abroad (CBE) and the Foreign Capital Census in the Country, both previously made public by the Central Bank.