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Brazil reaches 6th position in the UN ranking of foreign direct investment

Brazil advanced three positions and was the sixth country that most attracted investments direct foreigners in 2021, according to a report by the Agency for United Nations for Trade and Development (Unctad) released this Thursday (9).

Data from the World Investment Report indicate that last year Brazil received US$ 50.3 billion in foreign investments.

The figure represents an increase of 78% compared to 2020, when the total was US$ 28.3 billion, but is still below the pre-established level.pandemic of US$ 65.3 billion.

The Unctad states that the sectors most benefited by the investments were agribusiness car manufacturing, electronics, information technology and financial services.

The value of the so-called “greenfield” projects, which have not yet got off the ground, rose 35%, while the total value of international financing agreements rose 32%.

Among the “greenfield” projects, the report highlights the Bravo Motor automaker’s plan to manufacture electric vehicles, batteries and other components in Brazil. The project is valued at US$4 billion.

Among the financing agreements, the biggest is the construction of a offshore wind power generation farm valued at US$5.9 billion. The financier is the Spanish company Ocean Winds.

Brazil’s performance was no exception. the region of Latin America and the Caribbean saw a 56% increase in foreign investment, totaling US$ 134.4 billion.

The result was also lower than the pre-pandemic period, but represented a recovery compared to 2020, when the health crisis led to a 45% drop in investments, the largest for the year in developing regions.

According to the report, the highlight in the region was the total amount announcing in international financing agreements, which surpassed pre-pandemic levels. Unctad attributes the result to large projects in the area of infrastructure transport, especially in Brazil, and in mining activities and activities related to renewable energy .

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For the agency, the positive performance is linked to the high global demand for commodities agricultural and mineral resources, helping the strong growth of foreign investment in many economies in the region.

Globally, foreign investment is up 64%, with a strong recovery from 2020 and totaling $1.58 trillion. Most, almost three quarters, of this growth was concentrated in developed countries.

The report attributes the good performance to the heated activity of Fusions and acquisitions of companies and a rapid growth of internationally financed projects amid infrastructure-focused stimulus packages.

Another important factor for the result was the high profits of multinational companies, which reached record levels. The profit of the 5,000 largest multinationals doubled, reaching 8% for each sale. As a result, multinationals from developed countries more than doubled their investments, accounting for three quarters of the global total.

Despite the good performance, the report highlights that investment in “greenfield” projects rose less than in acquisitions and mergers, and remains below pre-pandemic levels. “This is a concern, because new investments are crucial for economic growth and development prospects,” he says.

In the global ranking, the United States led the inflow of foreign investment, totaling US$ 367 billion, compared to US$ 151 billion in 2021. China ($181 billion), Hong Kong ($141 billion), Singapore ($99 billion), Canada ($60 billion) and Brazil.

For 2022, Unctad warns that the business and investment environment has changed dramatically with the effects of war in ukraine more specifically with rising food and fuel prices and a tighter financial environment.

The report also highlights uncertainties about further impacts of the pandemic, rising interest rates in major economies, negative sentiment in markets and the potential for recession.

As a result, “signs of weakness are already appearing this year. Preliminary data for the first quarter point to a 21% drop in the announcement of greenfield projects, 13% in mergers and acquisitions and 4% in project financing agreements”.

The agency’s projection is that the 2021 growth process will not continue this year, that foreign direct investment flows should have a downward trend or, in the best scenario, stability.

The report also highlights that the plan to implement a 15% global minimum tax on the profits of large multinationals, scheduled to be implemented between 2023 and 2024, is expected to have “major implications for investment policies”.

“Although tax reforms increase revenue collection for developing countries, from the point of view of attracting investments, they bring opportunities and challenges”, says the secretary general of Unctad, Rebeca Grynspan.

For her, “developing countries face constraints in their responses to reforms, due to the lack of technical capacity to deal with the complexity of tax changes and because of investment treaty commitments that can hamper effective fiscal policy action. The international community has an obligation to help.”

Source: CNN Brasil

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