Brazil Current Account June 2016


Current account returns to deficit in June

Brazil’s current account returned to deficit in June after posting two consecutive surpluses. The current account registered a shortfall of USD 2.5 billion, which notably contrasted May’s USD 1.2 billion surplus yet was a smaller gap than June 2015’s USD 2.6 billion deficit. Market analysts had expected a milder USD 1.5 billion deficit.

The trade surplus deteriorated from May’s USD 6.4 billion to USD 4.0 billion in June (June 2015: USD 4.5 billion). Weak external demand along with a recent strengthening of the real has hurt Brazilian exports, which fell by 14.7% over the same month last year (June 2015: -4.1% year-on-year). However, the abysmal state of the economy has caused import demand to plummet and imports declined by 15.4% in June (June 2015: -16.7% yoy).

The moving 12-month current account deficit tallied USD 29.4 billion in June, which was a slightly smaller shortfall than May’s USD 29.5 billion deficit. The improving current account balance has been a bright spot in Brazil’s economic data amidst an onslaught of negative news concerning Latin America’s largest economy. June’s result is equivalent to approximately 1.7% of GDP.

Analysts who participated in this month’s LatinFocus Consensus Forecast panel expect a current account deficit of 1.1% of GDP in 2016. For 2017, panelists expect the current account deficit to be stable at 1.1% of GDP.

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Brazil Current Account Chart

Brazil Current Account June 2016 0

Note: Monthly and 12-month current account balance in USD billion.
Source: Central Bank of Brazil (BCB) and FocusEconomics calculations.

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