Brazil returns to the list of the 25 most attractive forgein investors

published on 22 June 2020 | reading time approx. 2 minutes

After ceasing to be considered one of the most attractive destinations for foreign direct investment in 2019, Brazil was once again in a ranking of 25 most reliable countries for this type of capital flow. This is shown in the 2020 edition of the FDI Global Index, by the international consultancy Kearney.

On a scale of 0 to 3, Brazil increased its score from 1.37 in 2018 to 1.65 this year, an improvement that placed it 22nd among the top 25 on the foreign investor radar - the only Latin American representative on the list. The U.S. leads the field for eight years in a row. To map the countries with the greatest potential to attract investment over the next three years, Kearney consults 500 multinational executives annually. According to Mark Essle and Sachin Mehta, partners of the consultancy in the country, the Brazilian results were affected by the crisis in the final period of the poll, but the worsening was widespread.

 
Despite the uncertainties in the economic and political environment, 35 per cent of executives said they had a more optimistic outlook for Brazil over a 3-year horizon compared to the previous year's vision. The share of the most pessimistic was between 13 and 52 per cent, who said that their perception remained relatively the same. "I'm positively surprised that Brazil has returned to the ranking already this year, which means there is a certain degree of confidence in the future of the country," Essle said. "It's a proof that if pro-market policies are signaled, you can attract the foreign investor.

 
As an example of these measures, he mentions the reform agenda, of which the main exponent is the change in the welfare system. Another positive factor is the governmental program to privatize large state-owned companies, in addition to a more austere stance on public accounts before Coronavirus, he added. "Of course there is concern about fiscal balance, but there have been advances, such as welfare and the “Lei do Teto de Gastos” (Expense Ceiling Law), said the executive, for whom the increased turbulence in politics should not contaminate long-term expectations for the country.

 
Although it is difficult to make comparisons with the present moment, in 2014 the world was surfing a growth wave, which increased direct investment flows in a generalized way, recalls Mehta. After that, in 2016, the impeachment of the  president Dilma Rousseff (PT), affected the country's image. "Now we are starting to get back in the right direction."

 
For the country to continue to appear in the ranking, the government needs to continue with the reforms, with emphasis on tax, point out the Kearney partners. According to the research, the tax system and the facility to pay taxes are the main issue taken into account when deciding which subsidiaries to invest in.

 
Source: Valor Econômico - São Paulo