BC reviews data and foreign investment in Brazil falls 17% in 2023

The Central Bank promoted a broad review of foreign direct investment statistics in Brazil over the last two years. The result was a reduction in the amounts invested in 2022 and an increase in disbursements in 2023.

As a result, according to the new accounting, international capital contributions to the Brazilian productive sector fell “only” 17% last year. Before the review, data accumulated up to November showed a 36% drop in foreign investment compared to the same period in 2022.

The so-called Direct Investment in the Country (IDP) compiles contributions from foreigners in the so-called “real economy”, such as purchases of shares in the capital of Brazilian companies, reinvestment of profits and loans from multinationals to their branches in Brazil.

According to a report from the external sector published this Monday (5), the IDP was US$62 billion in 2023, 17% below the balance in 2022 (US$74.6 billion).

Before the review, Central Bank statistics indicated a disbursement of US$87.2 billion in 2022. This number, therefore, was reduced by just over US$12.6 billion.

The revision in the 2023 data went in the opposite direction. Previous accounting indicated that, from January to November, the country had received US$52.7 billion in foreign direct investment. In the new version, contributions in the same 11 months were increased to US$62.3 billion – an increase of almost US$10 billion.

In the case of December 2022 data, what was a positive balance of US$5 billion turned into a net outflow of US$479 million after the review. In December 2023, meanwhile, the report released this Monday also points to a net capital outflow of US$389 million.

According to the Central Bank, the performance of the three components of the IDP was as follows in 2023:

• net inflow in capital participation fell by US$5 billion (it was US$31.6 billion in 2023, compared to US$36.6 billion in 2022);
• reinvested profits grew by US$662 million (US$21.2 billion in 2023 compared to US$20.6 billion in 2022); It is
• net inflows into intercompany operations fell by US$8.4 billion (US$9.1 billion in 2023, compared to US$17.5 billion in 2022).

“The trajectory of foreign investment is the same”, says director of the BC

According to the director of the Central Bank’s Statistics Department, Fernando Rocha, the review is due to the incorporation of new, more complete data sources. “There was an expansion in data sources, an improvement,” he said at a press conference this Monday.

According to the director, the first release of statistics usually uses numbers from the Exchange System, captured immediately. The review, in turn, incorporates “declaratory” data, which are subsequently reported by companies through other BC systems.

Rocha highlighted that the review did not change the trajectory of the IDP. “It seems to me that the trajectory is the same. In 2022 we had higher inflows and, in 2023, these inflows were lower. This remains after the review,” he stated.

According to him, the review was originally scheduled for November, but did not occur due to the mobilization of the institution’s employees, who asked for a salary adjustment. This mobilization has delayed the publication of a series of statistics, in addition to affecting other services provided by the Central Bank.

Note released by the BC informs that its policy establishes reviews of balance of payments statistics twice a year, in July and November.

“In relation to data sources, it is worth noting that transactions recorded in the Foreign Exchange System, the main source of data for compiling balance of payments statistics, are captured immediately and, therefore, included in the first statistical release. On the other hand, the sources of declaratory data have a greater lag and, as they require specific treatment and validation, they are incorporated later, during the review process”, says the note.