Brazil Current Account August 2020


Brazil: Current account logs fifth month of surplus in August

September 23, 2020

Brazil’s current account balance logged a surplus for the fifth consecutive month in August, registering a USD 3.7 billion surplus. August’s result contrasted the USD 3.0 billion deficit recorded in the same month a year earlier, although it was up from July’s surplus of USD 1.4 billion.

August’s reading largely reflected a narrower shortfall in the services account and a lower primary income deficit. Furthermore, the trade surplus increased in the month. The merchandise trade surplus rose to USD 6.0 billion from USD 3.6 billion in August 2019 on a sharper decline in imports than of exports. Meanwhile, net foreign direct investment weakened notably in August, totaling USD 1.4 billion (August 2019: USD 9.5 billion).

Accordingly, the 12-month sum of the current account balance narrowed to a USD 25.4 billion deficit, which equates to approximately 1.6% of GDP, down from the USD 32.2 billion shortfall logged in the 12 months ending in July (2.0% of GDP).

Commenting on the result, Alberto Ramos, economist at Goldman Sachs, reflected:

“Overall, the short-term current account dynamics are favorable but a deep fiscal adjustment that would elevate public sector savings is critical to facilitate a permanent structural current account adjustment (rather than just a cyclical adjustment driven by the weak below-potential domestic demand).”

The LatinFocus Consensus Forecast projects a current account deficit of 0.8% of GDP in 2020. For 2021, panelists foresee the current account deficit at 1.4% of GDP.

Author:, Economist

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Brazil Current Account Chart

Brazil Current Account August 20 20 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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