Direct foreign investments total US$ 90 billion in 2022 and are the highest in ten years, says BC

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Information was disclosed this Thursday by the Central Bank. At the same time, the deficit in external accounts rose 20% last year, to US$ 55.6 billion. Direct foreign investment in the Brazilian economy totaled US$90.5 billion in 2022, the Central Bank reported this Thursday (26). This is the highest level for a closed year since 2012 (US$ 92.5 billion), that is, in ten years. In 2021, direct investment inflows totaled US$46.4 billion. The BC’s historical series for this indicator begins in 1995. The entry of investments into the country is related to the growth of the Gross Domestic Product (GDP) — despite the slowdown that has been registered due to the rise in basic interest rates in the economy. In 2021, the Gross Domestic Product (GDP) grew by 5%. The official result for 2022 has not yet been released by the Brazilian Institute of Geography and Statistics (IBGE), but the financial market expects an expansion of around 3% in the last year. The inflow of resources through this modality reveals that foreigners are making productive investments in the country, which denotes confidence in the Brazilian economy. External accounts Still according to the BC, the country’s external accounts registered a deficit of US$ 55.6 billion in the whole of last year, with an increase of 20% compared to 2021 (-US$ 46.3 billion). This was the biggest gap for a closed year since 2019, when it totaled US$ 68 billion. The BC’s historical series for this indicator begins in 1995. The result in current transactions, one of the main indicators of the country’s external sector, is formed by the trade balance (trade of products between Brazil and other countries), services (purchased by Brazilians abroad) and income (remittances of interest, profits and dividends from Brazil abroad). According to the BC, the increase in the external account deficit in 2022 is due to a worsening in the service account (more spending abroad, including travel) and income (increase in remittances abroad by companies). The increase in the external account deficit is also related to the growth of the Brazilian economy. With a still positive level of activity, there is a greater demand for products and services from abroad. Despite the increase in the shortfall in the external accounts, direct foreign investment in the economy was sufficient to “finance” the negative result.

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