Investment in Brazil: From Crisis to Recovery

17 Pages Posted: 1 Feb 2018 Last revised: 18 Nov 2021

See all articles by Ivo Krznar

Ivo Krznar

International Monetary Fund (IMF)

Troy Matheson

Government of New Zealand - Department of Economics

Date Written: January 2018


While Brazil's deep recession has been broad based, it has been marked by a particularlylarge fall in investment. Real investment fell by around 30 percent between the beginningof 2014 and the beginning of 2017. This paper finds that a variety of factors contributed tothe investment decline, including a deterioration in Brazil's medium-term growthprospects, rising real interest rates, falling terms of trade, rising uncertainty related toeconomic policy, rising levels of corporate leverage and lower cash flow. Some of thefactors that have weighed on investment over recent years have begun to normalizeproviding some impetus for a recovery. However, still-high levels of corporate leverageand the prospect of continued uncertainty related to economic policy settings suggest aturnaround in investment is likely to be subdued.

Keywords: Investment, Western Hemisphere, Brazil, Recession

JEL Classification: E22, E32

Suggested Citation

Krznar, Ivo and Matheson, Troy, Investment in Brazil: From Crisis to Recovery (January 2018). IMF Working Paper No. 18/6, Available at SSRN:

Ivo Krznar (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Troy Matheson

Government of New Zealand - Department of Economics ( email )

2 The Terrace
P.O. Box 2498
New Zealand

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