The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
While Brazil's deep recession has been broad based, it has been marked by a particularly
large fall in investment. Real investment fell by around 30 percent between the beginning
of 2014 and the beginning of 2017. This paper finds that a variety of factors contributed to
the investment decline, including a 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.