Investment should recover in 2024 with help from the public sector

After a sharp drop of 3% last year, the expectation is that investment in fixed assets will recover in 2024. The brokerage XP Investimentos projects a growth of 1.3% for Gross Fixed Capital Formation (GFCF), the term used by economists to describe investments that result in improving and expanding the productive capacity of an economy.

The boost will come mainly from the public sector. The forecast is that R$310 billion will be invested this year, representing an increase of 1.5% compared to 2023. Since 2019, the share of the consolidated public sector in total investments has risen from 13% to 16% last year , approaching the historical average of 16.7% between 1996 and 2023.

However, the scenario is expected to change from 2025 onwards. Restrictions on the increase in tax expenditure and the drop in revenue in state and municipal governments will likely reduce the weight of public investment in total. For next year, the projection is for a more modest expansion, around 0.4%.