Brazil: Current account deficit moderates in August
September 27, 2016
Brazil’s current account balance improved in August, continuing to build on the considerable gains made over the past year. The current account registered a shortfall of USD 579 million, which was notably smaller than July’s USD 4.1 billion deficit and an improvement on August 2015’s USD 2.6 billion deficit. Market analysts had expected a wider USD 755 million deficit.
Foreign direct investment came in at USD 7.2 billion, a significant improvement after recording USD 78 million in July—the lowest result on record. Meanwhile, the trade surplus moderated from July’s USD 4.6 billion to USD 4.1 billion in August (August 2015: USD 2.7 billion). Behind the moderation was a sharp improvement in imports, in part due to the stronger real. Imports swung to a 0.4% expansion in August over the same month last year after falling 27.2% in July. Exports also recorded gains, growing 9.7%, the best result seen since February (July: -11.9% year-on-year).
The moving 12-month current account deficit came in at USD 25.8 billion in August, which was a smaller shortfall than July’s USD 27.9 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. August’s result is equivalent to approximately 1.5% of GDP and is the smallest deficit in over six years.