Investment rate in Brazil reaches the highest level since 2015

RIO DE JANEIRO, BRAZIL – According to a study by FGV, a relevant part of this improvement came from the higher prices of capital goods in relation to the prices of the economy as a whole.

In the third quarter of last year, the investment rate in the Brazilian economy reached the level of 19% of GDP. It was the highest level since the 2nd quarter of 2015 when it was also 19%.

And a considerable rise from the 15.7% in the 3rd quarter of 2020. But, according to a study by researchers at Ibre/FGV, these numbers were driven by one-off factors and did not indicate the robustness of economic activity.

According to the study, a relevant part of this improvement came from the higher prices of capital goods in relation to the costs of the economy as a whole. In the 3rd quarter of last year, while general inflation accumulated a 9.9% increase in a year, investments measured by the Gross Fixed Capital Formation (GFCF, a measure of investments in the GDP) had risen 15.3%.

Two other occasional phenomena would also be behind this growth. The first is the abrupt internalization of oil platforms due to a purely accounting operation: the change in Repetro, which allowed companies to transfer the ownership of this equipment from subsidiaries abroad to the Brazilian headquarters.

The second is the strong growth of investments in tractors and other agricultural machinery and trucks and buses, both significantly influenced by international commodity prices.

“It doesn’t mean that investments are pumping,” says Claudio Considera, the National Accounts Nucleus coordinator at Ibre/FGV. “Investments are more recovering recent losses, helped by a low base of comparison.”

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