Pulled by the boom in commodities, Brazil has regained the position it already held in 2019, closing 2021 as the sixth-biggest destination for foreign investment. But the national economy is not yet regaining the appeal of the resources that existed before the pandemic, nor the position it occupied in the rankings ten years ago. Data released this Thursday by the UN Conference on Trade and Development show that Brazil received US$50 billion in flows, versus US$28 billion last year.
The volume placed the national economy above all European countries and raised the economy from 9th to 6th among preferred investment destinations in 2020.
The UN warning for 2022 is that there will be a contraction in investments in the world and that the global crisis should hit the developing economies harder. The brakes are already felt in the first three months of the year, down 21%.
But in the case of Brazil, it is predicted that sustained high commodity prices will encourage multinational companies to increase their investments in the country in 2022.
Brazil has already been a traditional destination for foreign investment flows for years, according to James Zhan, director of the Investment Department at Unctad. However, after the sharp decline in 2020, the recovery is still not complete.
“There has been a strong recovery, but it has not yet reached the levels that existed before the pandemic or even at the time of its peak,” Zhan said. Said. According to him, this influx in 2021 was attracted by multinational companies that were accumulating and reinvesting profits. “A partial recovery,” he said.
If the 78% increase in Brazil is considered positive, the figures reveal that the country has yet to continue the model that existed between 2016 and 2019. In the last year before the pandemic, investments totaled $65 billion.
The investment stock in Brazil also fell. In 2010 it was $640 billion. Now, the volume is 592 billion US dollars.
The bet for 2022 is that the stream may finally regain its 2019 levels. “Commodity prices may encourage multinational companies to expand their operations in the mining industry or agriculture,” the representative said. According to him, Brazil “could see continued growth in investment for a full recovery”.
Under previous governments, Brazil has taken a higher position in the investment rankings. In 2012, the national economy was ranked as the third most cited country by Unctad (UN Conference on Trade and Development) as a preferred investment destination by multinational companies. As of 2010, the national economy ranged between the world’s fourth and fifth largest investment recipients, a situation that began to shift in 2019 and spurred into an even greater slump in 2020.
For 2021, countries like Canada and Singapore still outpace Brazil with investments of US$60 billion and US$99 billion respectively.
The ranking is led by the US, which received US$367 billion in 2021, followed by US$191 billion for China. List of top ten destinations still complete by India and South Africa
South, Russia and Mexico.
Foreign investment in South America rose 74% to reach US$88 billion, according to the UN agency. The main reason for this is the interest of multinational companies in the commodities and minerals sector.
“All the main buyers, including Brazil, Chile and Colombia, have seen investment flows increase as flows into mining and hydrocarbons resume,” the document says. “Investments in Brazil’s agribusiness, automotive and electronics industry, information technology and financial services totaled US$50 billion, up 78%,” he said.
According to the UN, the value of new projects announced in the country increased by 35 percent and the number of international project finance agreements increased by 32 percent.
One of the biggest projects was Bravo Motor’s (United States) $4.4 billion project in Brazil to manufacture electric vehicles as well as batteries and components. The largest of the international project financing deals was the construction of a US$5.9 billion 2 GW offshore wind farm sponsored by Ocean Winds (Spain).
Brazil also rose in the ranking of countries investing abroad. In 2021, national companies received US$23 billion, placing the country in 16th place. In 2020, 13 billion US dollars were withdrawn in foreign sources, making Brazil 163rd.
Despite Brazil’s top ranking, the country is far from the top. Americans invested a total of US$403 billion in the world in 2021, while Germany invested US$152 billion.
World flow continues to pre-covid levels, but 2022 sees deep brakes
The UN agency points out that while worldwide foreign direct investment has recovered to pre-pandemic levels in 2021, reaching approximately US$ 1.6 trillion, this trend is unlikely to continue in 2022.
It has also been found that sustainability-themed investment products in global financial markets have increased by 63% from 2020, and governments around the world are trying to develop regulatory frameworks for sustainable finance. The report also argues that developing countries need substantial assistance from the international community to cope with an environment of uncertainty and risk aversion.
Rebeca Grynspan, secretary-general of the United Nations Conference on Trade and Development, explained that global investment flows rose 64% last year to $1.58 trillion, fueled by increased M&A activity and the lack of funding and rapid growth in large-scale international project finance. infrastructure incentive packages
While the recovery benefited all regions, three-quarters of growth was concentrated in advanced economies as flows increased 134% and multinationals posted record profits.
Flows to emerging economies were up 30% to $837 billion – the highest on record, largely driven by strength in Asia, a partial recovery in Latin America and the Caribbean, and a recovery in Africa. The share of developing countries in global flows remained just over 50%.
Emerging Asia, which receives 40% of global investment, saw flows rise to an all-time high of $619 billion in 2021 for the third year in a row. Flow in China grew 21% and Southeast Asia 44%.
For 2022, however, the business and investment climate has changed dramatically as the war in Ukraine resulted in a triple crisis of higher food and fuel prices and tighter financing.
Factors such as the pandemic, rising interest rates in major economies, negative mood in financial markets and a possible recession are also pressing.
“Despite high profits, investment by multinational companies in new projects abroad is still one-fifth below last year’s pre-pandemic levels,” he said.
In fact, signs of weakness are already appearing this year. Preliminary data for the first quarter show that new project announcements fell by 21% globally, cross-border M&A activity by 13% and international project financing deals by 4%.
“UNCTAD estimates that the growth momentum in 2021 will not be sustained and that global flows in 2022 will likely follow a downward trajectory and remain stable at best,” the report says. “However, even if flows are expected to remain relatively stable in terms of value, new project activity is likely to suffer more from investor uncertainty.”
Once again, who will suffer, it will be the ones who show up. “Flows to emerging economies in 2022 are expected to be heavily influenced by the war in Ukraine and its wider consequences, and by macroeconomic factors, including rising interest rates,” the report said.
source: Noticias
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