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Brazil: A Good Choice for Foreign Direct Investment

Posted on the 02 April 2013 by Angelicolaw @AngelicoLaw

According to Brazilian officials, foreign direct investment will continue to flood the country this year. Sergio Gabrielli, the former president of Petrobras who is now the Secretary of Planning for the State of Bahia, said investments directed towards the domestic market will drive growth. Bahia is considered the most vital state economically in Brazil’s northeast.

The investor sentiment about Brazil is very strong

In Gabrielli’s opinion, this is one of the best moments in Bahia’s history because of the large investments that are coming in. The State of Bahia already has a portfolio of over $35 billion, primarily composed of private investments mainly in paper and pulp, wind power, and mining. The investments are slated to continue through to the year 2015. And according to Gabrielli, there has been little downturn in investors’ willingness to put money in.

Gabrielli said the Brazilian government has added $10 billion to the existing $35 billion in Bahia, taking the total investment for the state to $45 billion. However, he did admit that there was a decline in the country’s economic growth last year and that the flexible exchange rate hurt domestic companies. Yet he insists that these factors are not keeping foreign investors away.

Brazil is still one of the best foreign direct investment destinations in the world

According to Miriam Belchior, Brazil’s federal Minister of Planning, Brazil is ranked third after China and the US as the most sought-out investment destination. The ranking, she said, is based on a survey of over 1,300 business leaders. The minister denied that inflation was a problem in the country, yet she noted that inflation of 6.2% last year was due to unexpected food price inflation and had nothing to do with the country’s economic performance. Moreover, it fell within the predicted range of 2.5 to 6.5% set by the Brazilian Central Bank.

Various economic indicators are showing signs of improvement such that Brazil could see 3 to 4% growth this year. More and more the Brazilian government is allowing the private sector to participate in the country’s investments, recognizing the need to remain competitive and improve the quality of its workforce. Belchior commented that these issues are being tackled by increasing government expenditure on innovation and science, and through a program aimed at giving professional training to improve quality of workforce.

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