Brazil: Selected Issues
IMF Staff Country Reports, July 13, 2017
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- Brazil: Selected Issues
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Bibliographic details
- Published: July 13, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484309919.002
Executive summary
- This Selected Issues paper examines the proximate causes of dramatic fall in investment in Brazil and the prospects for investment going forward.
- A variety of factors contributed to the investment decline, including deterioration in Brazil’s medium-term growth prospects, rising real interest rates, falling terms of trade, rising uncertainty related to economic policy, rising levels of corporate leverage and lower cash flow.
- Some of the factors that have weighed on investment over recent years have begun to normalize providing some impetus for a recovery.
- However, still-high levels of corporate leverage and the prospect of continued uncertainty related to economic policy settings suggest a turnaround in investment is likely to be subdued.
Factors driving the investment decline
- Deterioration in Brazil’s medium-term growth prospects
- Rising real interest rates
- Falling terms of trade
- Rising uncertainty related to economic policy
- Rising levels of corporate leverage
- Lower cash flow
Prospects for investment and near-term outlook
- Partial normalization of some adverse factors has begun, providing some impetus for recovery.
- Persistently high corporate leverage remains a constraint on investment.
- Ongoing uncertainty regarding economic policy settings implies the turnaround in investment is likely to be subdued.
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