The largest economy in Latin America is aiming to build a transformative post-pandemic infrastructure with investments in technology and green energy, representing opportunities for U.S. companies.
On October 4, Brazil’s Infrastructure Minister Tarcisio de Freitas arrived in New York City for a series of meetings, during which he presented some of Brazil’s infrastructure portfolio to potential investors. Part of the Brazilian government’s effort to build a transformative post-pandemic national infrastructure is to attract private capital and privatize some infrastructure elements.
Just in the upcoming month and a half, the government plans on auctioning off 13 assets and raise over $5 billion. By the end of next year, the government will have raised a projected $45 billion through infrastructure auctions. Regulatory changes at the federal and state levels are designed to attract private capital to enhance Brazil’s infrastructure, including the railroad, airport, and energy sectors.
The picture that emerges explains why the United States International Trade Administration (ITA) described infrastructure as “a best prospect industry sector” for Brazil. It’s also why the U.S. Trade and Development Agency recently announced funding for early-stage developments in several of Brazil’s infrastructure sectors, which it believes will blossom into projects that will benefit U.S. exporters.
The rosy possibilities reflected in the ITA’s assessment have emerged only recently. Infrastructure investments had been suffering in Brazil since before the arrival of COVID-19. According to Statista, a provider of market data, investments in Brazil’s infrastructure reached a decade-low in 2020 of $23 billion, down from the 2014 high of $35 billion. Pre-pandemic years did not fare much better: 2019 saw $24 billion in investments.
Brazil’s Economy Fares Better
According to the International Monetary Fund (IMF), Brazil’s economy has fared better than others in Latin America during the pandemic, thanks largely to a robust government response to the virus. In 2020, the government promulgated “one of the biggest stimulus packages in emerging markets,” said an IMF report, “nearly 4% of GDP in emergency cash transfers alone in 2020.” According to a report from Deloitte, the government’s recovery and infrastructure programs will total as much as 15% of GDP, or around $276 billion.
Economic growth is projected to rebound to 5.3% in 2021, after a 2020 contraction of 6.8%, according to the IMF, benefitting from price increases for Brazil’s commodities exports. According to the Deloitte report, upticks in the prices of soybeans, iron ore, and oil have “likely aided Brazil’s overall GDP growth.”
The infrastructure policies being pursued by the government of Brazil reflect many of the priorities proposed in a recent economic survey from the Economic Commission for Latin America and the Caribbean (ECLAC). As explained by ECLAC’s executive secretary, Alicia Bárcena, the region needs “policies for a transformative recovery with an emphasis on investment,” including “industrial policies and technologies to drive growth in sectors…
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