Confidence in Brazil as an investment destination ranks highly among international executives who rate Brazil sixth best in the world. Investors are attracted to its large domestic market, growing middle class and natural resources. Furthermore, one of the highest percentages of executives say they are more optimistic about Brazil this year than last.
These findings are in The 2015 AT Kearney Foreign Direct Investment Confidence Index, carried out earlier this year and published recently. The Index takes an annual look at investment levels worldwide by international companies and draws on opinions of senior executives in the world’s leading corporations in 27 countries.
Brazil ranks in sixth position
This year’s results find the US at the top of the Index for the third year in a row with a rating of 2.10 out of 3 in foreign direct investment (FDI) confidence. In second place is China with a mark of 2, followed by the UK with 1.95, Canada with 1.94 and Germany with a score of 1.94. Brazil lies just behind them in sixth place with 1.87. Brazil drops one place compared to 2014, but it is the only South American country to feature within the 25-country rankings.
Senior executives claim to feel more optimistic about the Americas than any other region in the world. Their outlook for the regional economy compared to a year ago is 51 per cent more optimistic (the highest level in the world) and only 8 per cent claim that their investment confidence is more pessimistic, the lowest global level.
Reasons for high optimism in Brazil
When asked whether their outlook for a particular country is more or less optimistic than in 2014, 28 per cent of survey participants state a more positive perspective for investment in Brazil. This is the same level for Australia, India, Japan and the UK, and only Canada, China, Germany and the US attract higher optimism levels.
Specifically for Brazil, the Index reports that the country has maintained its position as a top destination of FDI – the US$62 billion in 2014 represented the highest levels of investment in Latin America. Brazil offers several big incentives to international investors with the country’s huge domestic market at the top of its attractions. The growing middle class and vast natural resources are also major draws for investment in Brazil.
AT Kearney cites two large investment operations in Brazil as examples of levels of FDI. In April last year, Banco Santander purchased the remaining segment of its Brazil subsidiary for US$6.5 billion and in March this year, British American Tobacco bought a stake in Brazil’s largest cigarette manufacturer Souza Cruz for US$3.5 billion.
Global FDI levels set to rise
According to figures published in the Index, FDI levels last year fell by 8 per cent to US$1.26 trillion, a decrease that AT Kearney regards as part of the stabilisation trend experienced by FDI since the global recession. Current levels still remain well below their peak in 2007, although the Index reports that two-thirds of companies plan to boost their FDI next year with many intending to return to investment levels seen before the crisis.
Source: AT Kearney