Thenet inflow of direct investments in the Brazil (IDP) has been below the estimate of the Central Bank (BC) for three months now. At the same time, the inflow of portfolio resources is gaining strength and has already more than compensated for the net remittance registered last year, caused by the pandemic.
In June, Brazil registered net inflows of only $174 million of IDP, the monetary authority informed Tuesday. The estimate was for inflows of $2.5 billion. The last time the inflow of IDP was in line with the BC’s estimates was in March, when there was a $6.9 billion inflow, with a projection of $7 billion.
The IDP is considered by many economists to be the most stable source of financing for the external accounts. In this account are included: resources destined to capital participation; direct loans granted by multinational companies’ headquarters to the subsidiaries in the country and vice-versa; return of Brazilian investments abroad.
In a press conference to comment on the June data, the head of the Central Bank’s statistics department, Fernando Rocha, said that the lower-than-expected IDP result last month can be explained by a “punctually” negative performance of reinvested profits. The account was negative by $364 million. In addition, inter-company operations were also negative, reaching $2.2 billion. According to Mr. Rocha, the number shows that the amortizations paid abroad from these operations were greater than the new credits received in Brazil.
In turn, in the accumulated 12 months to June, the IDP was $46.6 billion, equivalent to 3.02% of the GDP. It was the second consecutive month of decline in this type of comparison. Two months earlier, in April, the accumulated figure for 12 months was $52.7 billion, or 3.52% of the GDP.
The Central Bank projects that the IDP will end the year at $60 billion, or 3.8% of GDP. “Higher contribution is expected from the equity component, which should reflect the acceleration in profits and the better performance of the economy, offset by lower net inflows of inter-company loans,” the monetary authority said in the June Quarterly Inflation Report (RTI).
The median estimate of 62 financial institutions and consultants was $55 billion, according to the questionnaire prior to the last Monetary Policy Committee (Copom) meeting, distributed in early June. For July, the monetary authority’s projection is an inflow of $4.7 billion. In the partial monthly balance until Thursday, inflows totaled $4 billion.
Meanwhile, the portfolio investments negotiated in the domestic market were positive by $5.1 billion last month. The Central Bank does not make monthly projections for the performance of this type of resource, normally more volatile. In the first half of 2021, there was an inflow of $21.6 billion, against the remittance of $8.5 billion in the whole of last year. The result of the first six months of this year was positive both for stocks and investment funds ($9.5 billion) and for fixed income ($12.1 billion).
“Non-resident investors have already fully recomposed their positions in the country and continue to make investments,” said Mr. Rocha.
Finally, the current account deficit over 12 months was $19.6 billion last month, equivalent to 1.27% of the GDP. In other words: even with a recent performance below expectations, the IDP, which was 3.02% of GDP, continues to comfortably finance the negative balance. The current account balance measures the difference between what the country spends and what it receives in international transactions related to trade, income, and unilateral transfers. Both the Central Bank’s projection and the median of financial institutions and consulting firms is for a slight surplus this year of $3 billion, or 0.2% of GDP. For July, the monetary authority calculates a positive result of $1.3 billion.
The net inflow of direct investments in the country (IDP) has been below the estimate of the Central Bank (BC) for three months now. At the same time, the inflow of portfolio resources is gaining strength and has already more than compensated for the net remittance registered last year, caused by the pandemic.
In June, Brazil registered net inflows of only $174 million of IDP, the monetary authority informed Tuesday. The estimate was for inflows of $2.5 billion. The last time the inflow of IDP was in line with the BC’s estimates was in March, when there was a $6.9 billion inflow, with a projection of $7 billion.
The IDP is considered by many economists to be the most stable source of financing for the external accounts. In this account are included: resources destined to capital participation; direct loans granted by multinational companies’ headquarters to the subsidiaries in the country and vice-versa; return of Brazilian investments abroad.
In a press conference to comment on the June data, the head of the Central Bank’s statistics department, Fernando Rocha, said that the lower-than-expected IDP result last month can be explained by a “punctually” negative performance of reinvested profits. The account was negative by $364 million. In addition, intercompany operations were also negative, reaching $2.2 billion. According to Mr. Rocha, the number shows that the amortizations paid abroad from these operations were greater than the new credits received in Brazil.
In turn, in the accumulated 12 months to June, the IDP was $46.6 billion, equivalent to 3.02% of the GDP. It was the second consecutive month of decline in this type of comparison. Two months earlier, in April, the accumulated figure for 12 months was $52.7 billion, or 3.52% of the GDP.
The Central Bank projects that the IDP will end the year at $60 billion, or 3.8% of GDP. “Higher contribution is expected from the equity component, which should reflect the acceleration in profits and the better performance of the economy, offset by lower net inflows of inter-company loans,” the monetary authority said in the June Quarterly Inflation Report (RTI).
The median estimate of 62 financial institutions and consultants was $55 billion, according to the questionnaire prior to the last Monetary Policy Committee (Copom) meeting, distributed in early June. For July, the monetary authority’s projection is an inflow of $4.7 billion. In the partial monthly balance until Thursday, inflows totaled $4 billion.
Meanwhile, the portfolio investments negotiated in the domestic market were positive by $5.1 billion last month. The Central Bank does not make monthly projections for the performance of this type of resource, normally more volatile. In the first half of 2021, there was an inflow of $21.6 billion, against the remittance of $8.5 billion in the whole of last year. The result of the first six months of this year was positive both for stocks and investment funds ($9.5 billion) and for fixed income ($12.1 billion).
“Non-resident investors have already fully recomposed their positions in the country and continue to make investments,” said Mr. Rocha.
Finally, the current account deficit over 12 months was $19.6 billion last month, equivalent to 1.27% of the GDP. In other words: even with a recent performance below expectations, the IDP, which was 3.02% of GDP, continues to comfortably finance the negative balance. The current account balance measures the difference between what the country spends and what it receives in international transactions related to trade, income, and unilateral transfers. Both the Central Bank’s projection and the median of financial institutions and consulting firms is for a slight surplus this year of $3 billion, or 0.2% of GDP. For July, the monetary authority calculates a positive result of $1.3 billion.
Source: Valor international
https://valorinternational.globo.com/