MercoPress. South Atlantic News Agency

Almost half of Brazil's GDP stems from foreign investments

The main foreign investors in Brazil are the United States, France, Uruguay, Spain, and the Netherlands, the BCB explained

According to a recent report released by Brazil's Central Bank (BCB), 46.6% of South America's largest country's Gross Domestic Product (GDP) last year stemmed from foreign investments.

 Brazil closed out 2024 with a stock of US$1.141 trillion in foreign direct investment in the country, representing almost half (46.6%) of its GDP, a record in the Central Bank’s time series. In 1995, when the series began, foreign direct investment accounted for 6.1% of the GDP. In 2000, it rose to 17.1%, reaching 25.2% in 2010. In 2019, it surpassed the 30% mark for the first time (34.6%). In 2023, it stood at 45%.

BCB Chief Statistics Officer Fernando Rocha pointed out that most companies receiving foreign capital were controlled by these investors, who at least own over 50% of the capital.

The BCB divides the US$1.1 trillion into two parts: US$884.8 billion is equity participation in companies (i.e., partners), while US$256.4 billion is intercompany operations (i.e., loans between companies).

“The most important thing is the typically productive nature of this direct investment, increasing installed capacity in the country and contributing to productivity growth,” Rocha said.

Despite the record against the GDP, Rocha noted that, in absolute terms, the stock of direct investment in the country was higher at the end of 2023, when it reached US$1.3 trillion. The head of the Central Bank’s statistics department argued this is due to the exchange rate. “These investments in Brazil are all made in reais, so we calculate these values, but then convert them into dollars,” he remarked.

According to Rocha, from the end of 2023 to the end of 2024, the exchange rate went from R$4.84 per dollar to R$6.19. “This currency depreciation reduced the value of direct investment when expressed in dollars,” he pointed out.

Rocha further mentioned that the main countries investing directly in Brazil are the US first, followed by France, Uruguay, Spain, and the Netherlands. “Our main sectors, which account for 40% of investment, are financial services, commerce, electricity, and oil extraction,” he listed. (Source: Agencia Brasil)