Brazil: Brazil's current account gap continues to widen
September 23, 2011
In August, the current account balance incurred a deficit of USD 4.9 billion, which exceeded the USD 3.5 billion deficit recorded in July and contrasted market expectations that it would narrow to USD 3.0 billion. The trade balance remained in surplus in August, totalling USD 3.9 billion, while the deficit in the services and income balance widened to USD 9.0 billion, due to elevated domestic demand that boosted service imports. The moving 12-month current account deficit stood at USD 49.9 billion in August (approximately 2.1% of GDP) and was larger than the USD 47.9 billion gap observed in July. The persistent current account deficit reflects a gap between saving and investment in the economy, which has been financed by a considerable amount of capital inflows, spurred by high interest rates and solid economic growth.