Foreign Direct Investment to Brazil rises more than 100%, country is 7th in attraction, says UNCTAD

RIO DE JANEIRO, BRAZIL – Brazil has recovered one position and climbed to the seventh position among the countries that will attract the most Foreign Direct Investment (FDI) in 2021 globally, according to estimates from the United Nations Agency for Trade and Development (UNCTAD).

FDI flow to the Brazilian economy grew more than 100% last year to US$58 billion, up from US$28 billion in 2020. ‘The volume of FDI to Brazil recovered in 2021, returning to the average levels of 2016-2019, around US$60 billion, before the pandemic, which shows that the country continues to attract foreign investment,’ said economist Astritt Sulstarova of Unctad’s investment division.

In 2020, Brazil had been the eighth largest destination for FDI, falling behind Thailand and Luxembourg, for example. It has now returned to the seventh position, surpassed by the US, China, Hong Kong, Singapore, the UK, and Canada.

Globally, FDI flow in 2021 took a sharp jump in 2021, reaching US$1.65 trillion, or 77% more than the US$929 billion recorded in 2020, at the peak of the pandemic.

In the case of Brazil, the largest economy in Latin America, the UNCTAD estimates are based on data from the first eleven months of 2021. And the signs were that, despite the turbulence and uncertainty always because of covid-19, foreign investors reactivated plans in the country.

Likewise, loans between companies increased by US$4 billion last year. The parent companies assisted their subsidiaries when in 2020, they had withdrawn US$5 billion from the country.

On the other hand, equity investments were around US$30 billion, up 7%.

Another essential data was the increase in “greenfield” projects – for building new facilities -, while cross-border mergers and acquisitions did not have much movement, at least in the first two quarters of the year, according to preliminary data.

The UNCTAD figures will gradually be adjusted as more recent statistics are released. But the result seems clear for 2021. As for 2022, the UN agency does not make country-specific projections, but caution remains amid the persistence of coronavirus variants.

In October, the Organization for Economic Cooperation and Development (OECD) had already shown Brazil as the sixth economy to attract the most FDI in the first half of 2021 while investing more abroad.

According to this entity, Brazilian companies divested US$13 billion abroad in 2020. But in 2021, the flow resumed and turned positive, with Brazilian companies making direct investments of US$778 million in the first quarter and leaping to US$9.5 billion in the second quarter.