Economy

Brazil has record dollar output in 2019

US currency evasion reflects global exit of investors to more stable environments amid global slowdown and US-China conflict

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  • And by the end of the year this deficit is likely to widen, as the period is usually marked by a more intense outflow of currency caused by profit remittances and position adjustments from multinationals;
  • For 2020, however, the projections are different.

From January to October, Brazil registered a negative foreign exchange flow of US $ 21.46 billion. According to information from the newspaper Valor Econômico, this amount is already higher than the 1999, until then the worst year in the historical series of the country. And by the end of the year this deficit is likely to widen, as the period is usually marked by a more intense outflow of currency caused by profit remittances and position adjustments from multinationals.

According to analysts polled by the newspaper, the factors that led to this deficit are several: the country’s basic interest rate at its lowest level, combined with the uncertainties of the US-China trade conflict, as well as the exit of investors to more stable environments.

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Another factor is the drop in export revenues, influenced by the slowdown in the world economy and also by the fact that companies prefer, in this scenario, to keep their reserves abroad in order to pay debts and operations or to prepay debts in foreign currency. Much of the funds raised by companies this year were also used to pay off foreign currency financing.

For 2020, however, the projections are different. According to analysts heard by Valor, next year promises to present some recovery in the economy, the result of greater confidence generated by the approval of the Social Security reform and the referral of other structural projects by the Brazilian government.

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“Foreign direct investment (FD) responds to the economy’s perspective in the medium and long terms. As projections for GDP in 2020 have risen again, they are expected to come back together, ” Iana Ferrão, economist at BTG Pactual, told Valor. According to the bank analysis, foreign direct investment (FDI) for 2020 is expected to reach $ 90 billion, exceeding $ 75 billion this year.