A Few Reasons Why the World Is Taking Its Money to Grow It in Brazil

Brazil's Seara Alimentos was bought by Cargill According to information disclosed this Wednesday, November 28, by the Brazilian Central Bank (BC), the volume of capital that entered Brazil between January and October was US$ 31.2 billion, and more than US$ 2.2 billion in November, totaling US$ 33.4 billion.

The inflow of foreign direct investment (FDI) in Brazil from January until now has far surpassed the forecasts made in the beginning of the year by financial analysts and the BC.

The figure is a historic record and now the BC forecasts that FDI inflow should reach US$ 35 billion until the end of the year. Halfway through the year, the bank was forecasting a total of US$ 25 billion, and surveys revealed that the market was expecting something around US$ 23 billion, figures that were later revised. In 2006, Brazil received US$ 18.8 billion.

To the president at the Brazilian Society of Transnational Corporations and Economic Globalization (Sobeet), Luí­s Afonso Lima, three factors drove the performance: overall increase in worldwide FDI flow; greater interest from investors in emerging countries, such as Brazil; and the fact that the country is on the verge of receiving the "investment grade" rating from international credit agencies, which may occur in 2008 or 2009.

"The flow is growing in the world at rates unseen since the year 2000, when total FDI reached US$ 1.4 trillion, a figure that should be surpassed his year," Lima said. "Besides, emerging countries are increasing their share and Brazil tends to benefit, also due to the fact that the country is about to receive the investment grade," he asserted.

This quest for emerging countries takes place, according to him, as a consequence of the overload in more developed economies, where certain market niches will no longer grow. In other words, in order to introduce a product one must relocate the competition.

"This does not benefit Latin America alone, but especially Asia. Furthermore, the emerging countries themselves have become exporters of capital," he stated. Such is the case of Brazil, which invested abroad more than it received investments last year.

With regard to the country's improved rating by agencies, Lima said that historically speaking, capital flow into countries on the verge of obtaining an "investment grade" increases. "And after that the flow increases even further," he said.

In the assessment of the economist Júlio Gomes de Almeida, of the Institute for Studies in Aid of Industrial Development (Iedi), Brazilian companies and economy are now in the "international show window."

"Now, our economy and our companies are recognized as being solid. They should even have been in the show window for much longer, but this does not happen overnight, it demands a lot of work," he stated.

According to Almeida, the figures were influenced by purchases of Brazilian companies made by foreign investors over the course of the year, such as the takeover of company Seara Alimentos by the multinational Cargill, or the purchase of shares in Arcelor Brazil by Arcelor Mittal.

"Brazil is coming up as a consequence of the growing economy and the good shape that its companies are in," he said. He also claimed that if the FDI inflow this year came as a surprise to the market, to Iedi it did not.

For both analysts, the level of foreign investment in the country has changed. Lima believes that the trend points to more growth in the next few years, or at least for the current value to be maintained.

Along the same lines, Almeida claimed that should the crisis caused by the real estate bubble burst in the United States worsen, there may even be a decrease in the FDI flow into Brazil in the short term, but a recovery is sure to follow soon.

Anba – www.anba.com.br

Tags:

You May Also Like

Brazil Claims Its Credit Worthiness is Better than the US’s. Not so fast!

Brazil’s minister of Finance, Guido Mantega, said this Wednesday, June 15, that the risk ...

Brazil Calls for an End to U.S. Dictatorship over the Internet

The administration of the internet must be made more democratic. This is the Brazilian ...

Brazilian Shoes to Be Certified for Comfort and Safety

This week, on Thursday, January 20, during the Couromoda 2010 trade fair, the Brazilian ...

In Brazil, Sterilization Is the Best Pill

Registered sterilizations in the central-west of Brazil, the country’s new agriculture frontier, reach 59 ...

Brazil Threatens to Sue NY Times

"The Brazilian government was overcome by a sense of profound indignation as a result ...

A Brazilian Voice in Fiction

Brazilian-born Anna K. Andrade, a resident of New York is one of the contributors ...

United Brazil and South America Depend Less on US and EU, says Lula

On his biweekly radio program, Brazilian President Luiz Inácio Lula da Silva said today ...

Brazilian Furniture Makers Betting on Foreign Market

Three companies located in the city of Lagoa Vermelha, in the southernmost Brazilian state ...

Brazil and Neighbors Sign Fresh Water Pact

Brazil took an important step to ensure the preservation and the quality of fresh ...

Shrinking Global Markets Draw Businesses to Brazil and LatAm

Brazil in particular as well as other Latin American countries continue to be attractive ...