Brazil: Current account returns to deficit in June
July 26, 2016
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.