Investment in Brazil: From Crisis to Recovery
17 Pages Posted: 1 Feb 2018 Last revised: 8 Feb 2018
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: Suggested Citation