Brazil's foreign direct investment inflows halve in 2020

BRASILIA: Foreign direct investment (FDI) into Brazil halved in 2020 from the previous year and was its lowest since 2009, while portfolio outflows from domestic stocks and bond markets rose by more than a quarter, central bank figures showed on Wednesday.

Brazil also posted its 13th consecutive annual current account deficit in 2020, although it was smallest in nominal terms and the lowest as a share of gross domestic product (GDP) since 2017, the figures showed.

Total FDI last year was $34.2 billion, roughly half the $69.2 billion of 2019 and the lowest since 2009. FDI in December was $739 million, the smallest monthly total since July 2016.

Investors poured $6.3 billion into Brazilian financial markets in December, with $3.7 billion going into stock funds and $2.7 billion into debt funds.

Over the whole of 2020, net portfolio outflows reached $8.5 billion, up 27% from the $6.7 billion outflows reported in 2019.

On the current account, Brazil posted a deficit of $5.4 billion in December, the first deficit in nine months, as a 45% jump in imports to $19.5 billion outstripped exports of $18.5 billion. Primary income, or earnings from foreign investments, showed a $3.1 billion deficit.

The $12.5 billion current account deficit in 2020 was the smallest in nominal terms since 2007 and, at 0.87% of GDP, the smallest as a share of GDP since 2017.

Brazil's international currency reserves at the end of December were $355.6 billion, down $1.6 billion from a year earlier.

For 2021, the central bank forecast a current account deficit of $8 billion in January and net FDI inflows of $2.8 billion for the month.