MercoPress. South Atlantic News Agency

Foreign investment still cautious about Brazil.

Brazil could fall short of the government's goal of attracting 10 billion US dollars in foreign investment this year and will probably end up with only around half of the 16.5 billion it obtained in 2002 according to independent economists.

Analysts quoted in Sao Paulo's Monday financial press said that 8.5 billion US dollars was a more reasonable number given the disappointing results in inward investment flows for September of 739 million, far below the 1.25 billion that was expected.

Now a figure of perhaps 9 billion US dollars by the end of 2003 looks more reasonable to Octavio Barros, chief economic analyst at Bradesco, Brazil's largest private bank, quoted in the "Folha de Sao Paulo".

Barros said that if all goes well, "13 billion US dollars could come in 2004 as the economic recovery consolidates", but analysts at the Banco Prósper gave their opinion that something closer to 10 to 12 billion US dollars seems more realistic.

When left-wing president Luiz Inacio Lula da Silva took office last January it was feared that foreign investment would begin to leave the country. However sound orthodox decisions regarding the budget and monetary policy, together with praise from the IMF stopped the outward tide and helped change expectations.

The tendency began to drop in the third quarter when it was confirmed that Brazil had entered a recessive period, --in spite of a boom in exports--, given the strong retraction in the domestic market forced by exceptionally high interest rates.

At of the end of September total foreign investment for the year stood at 6.5 billion US dollars.