Brazil: Current account deficit balloons in October
Brazil’s current account balance came in at a deficit of USD 7.9 billion in October, jumping from the USD 2.0 billion shortfall recorded in the same month of 2018. The result reflected recent revisions to balance of payments statistics and an update to the BCB’s methodology, which has led to notable downward revisions in the current account and revealed a bleaker external position for the country.
Behind October’s result was a sharp deterioration in the trade balance, which came in at USD 1.2 billion in the month (October 2018: 5.8 billion). Exports posted another sizable contraction in the month amid subdued demand from key trading partners, while imports grew solidly. Meanwhile, foreign direct investment fell, coming in at USD 6.8 billion in October (October 2018: USD 8.4 billion).
Accordingly, the 12-month trailing current account deficit also deteriorated and is now reveals a bleaker picture after the data revisions. The 12-month trailing current account deficit came in at USD 58.8 billion (September: USD 48.9 billion), the worst result seen since November 2015. The result is equal to approximately 3.0% of GDP.