Headline FDI inflows to Brazil rose by 26% to $75bn in 2019, according to the latest estimates from Unctad, pushing the country up four places to rank as the fourth largest host economy of FDI globally, behind the US, China and Singapore.

Unctad claims the rise in FDI was “partly driven by the country’s privatisation programme launched in July as part of the [Bolsonaro] administration’s efforts to jumpstart the economy”. Since Jair Bolsonaro assumed the presidency at the beginning of 2019, investors have hoped he would reduce the role of the state in Latin America’s largest economy.

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In keeping with the headline FDI trends, greenfield FDI specifically is also on the rise. Some 338 greenfield FDI projects were tracked in Brazil in 2019, an increase of 21 projects compared with 2018, according to the latest data from greenfield investment monitor fDi Markets. Driven by upticks in the automotive original equipment manufacturer, metals and renewable energy sectors, however, announced greenfield investment (including estimates where announced capital investments are not quoted) surged by 95% in the same period.

UK-based Fiat Chrysler Automobiles announced plans in 2019 to invest 7.5bn reais ($1.8bn) to expand its jeep production plant in Goiana Brazil, which is expected to create 9000 jobs by 2023. Greenfield FDI into Brazilian metals – which has historically been strong due to vast mineral reserves such as copper, iron and bauxite – has recovered since the sharp fall in global commodity prices in 2016 and the FDI decline during Brazil’s recession of 2014 to 2016.

The renewable energy sector saw the largest surge in foreign investment in 2019. Foreign companies announced a record 45 greenfield FDI renewable energy projects in Brazil, amounting to $7.5bn of investment according to fDi Markets. This compares to 12 projects and $2.5bn of investment in the sector for the whole of 2018. 

Reform efforts aimed at improving Brazil’s notoriously difficult business environment have been mixed. Brazil implemented regulations to make it easier to start a business and register property, according to the 2020 World Bank Doing Business report. The country fell 15 places in the ranking, however, to 124th out of 190 countries. 

On a regional basis, Brazil may be benefiting from instability in neighbouring countries, according to Alexis Crow, lead partner at PricewaterhouseCooper’s geopolitical investing practice in the US. “With riots in Chile and protests in Colombia, Brazil offered an attractive alternative. [There have been] also large commitments from sovereigns to use Brazil as a lily pad for the region,” she said.