Foreign direct investment in Brazil down 41% in July

In July, Brazil, Latin America’s leading economy, reported a foreign direct investment (FDI) intake of US$4.244 billion, marking a hefty decline of 41% compared to the same month in 2022, as stated by the Central Bank.

Following a significant decline in direct foreign investments in Brazil in June, reaching the lowest level since December 2021, the situation deteriorated further in July.

Of the total FDI in July, US$3.531 billion came from equity investments, while US$713 million was sourced from inter-company loan transactions.

From January to July 2023, the accumulated FDI stood at US$33.609 billion, indicating a drop of 31.2% compared to the same period in the previous year, which was US$49.191 billion.

In the year ending this July, the FDI was equivalent to 3.54% of Brazil’s Gross Domestic Product (GDP).

This was a slight rise from the 3.38% of GDP for the same period a year earlier.

Brazil’s international reserves also saw an increase of US$1.9 billion between June and July, totaling approximately US$345.5 billion.

This growth can be attributed to positive currency parity variations and interest income.

The country’s economy is projected to grow by over 2% this year. In recent months, inflation rates have stabilized around an annual rate of 4%.

As a result, the Central Bank has made a minor reduction in interest rates, though they remain high at 13.25%.