Despite its economic difficulties, foreign companies have continued to invest in Brazil. A recent Financial Times article revealed that direct foreign investment in Brazil reached a record US$15.4 billion in December 2016. The total foreign investment in 2016 reportedly reached US$78.9 billion, representing a 6 percent increase from 2015.
The foreign investment record came during one of Brazil’s worst years economically speaking. In fact, the country saw a 3.49 percent fall in GDP. The justification for investing in a seemingly sinking economy is simple according to Hanno Kirner, the Executive Director of Strategy for Jaguar Land Rover: Brazil is a large resource-rich country with a long economic reach and a young population. In other words, Brazil’s economy is simply too big for businesses to ignore.
Kirner’s statement isn’t just talk. Last year, Jaguar Land Rover opened a new factory in Rio de Janeiro valued at £240 million GBP. This was in a year when Brazil’s car industry saw a 20 percent decline in sales.
Brazil’s Finance Minister Henrique Meirelles reported that foreign investors demonstrated “great interest” in Brazil at the World Economic Forum in Davos, Switzerland. Meirelles contends that Brazil is primed for economic recovery, crediting both the robust foreign investments it has received as well as shifts in economic policies since the departure of President Dilma Rousseff.
Rousseff’s administration is blamed for causing the country’s massive inflation and public debt that reached a whopping 70 percent of the country’s GDP. The stabilization of budget spending and introduction of market-friendly policies implemented by sitting President Michel Temer have re-instilled international confidence in Brazil’s economy. In fact, according to Meirelles, Brazil’s worst recession is now a thing of the past.
As Brazil’s currency strengthens against the dollar, the country is slated for a turnaround in 2017 with 1 percent GDP growth predicted. Meirelles is optimistic: “Brazil will grow this year, and will grow in the coming years, at rates greater than expected.” Meirelles feels that Temer’s administration will contribute positively to economic growth and facilitate foreign investment as it cuts down on bureaucracy. This includes making it easier for entrepreneurs to open and close businesses, as well as gaining access to lines of credit.
