Economy

Brazil current account deficit shrinks to smallest since February 2018

A $1.5 billion current account surplus helped narrow the 12-month accumulated deficit to its smallest in two and a half years

200 reais note are seen after Brazil's Central Bank issues the new note in Brasilia, Brazil September 2, 2020. Photo: REUTERS/Adriano Machado/File Photo
  • A widening surplus in goods trade, and shrinking deficits in services and primary income again delivered the overall current account surplus, the central bank said;
  • The Central Bank forecasts a surplus of $1 billion for November.

Brazil’s balance of payments position with the rest of the world improved in October, figures showed on Wednesday, as a $1.5 billion current account surplus helped narrow the 12-month accumulated deficit to its smallest in two and a half years.

A widening surplus in goods trade, and shrinking deficits in services and primary income again delivered the overall current account surplus, the central bank said, adding that it forecasts a surplus of $1 billion for November.

READ ALSO: Brazil consumer confidence falls for second month in a row: FGV

Revisions to previous months meant that Brazil posted a tiny current account deficit of $10.8 million in June, breaking what would have been a run of seven consecutive surpluses, something not seen since 2006.

October’s surplus was more than the $1.3 billion forecast in a Reuters poll of economists, and narrowed the overall deficit in the preceding 12 months to 1% of gross domestic product, the smallest since February 2018.

Goods exports fell 8.6% from the same month last year to $18 billion, the central bank said, while imports fell 26.3% to $13.1 billion, giving a trade surplus of 4.9 billion. So far this year, exports have fallen 7.8% and imports have slumped 15.1%.

The services deficit shrank by 55.2% from a year earlier to $1.6 billion and the primary income deficit shrank by 70.6% to $1.9 billion, the central bank said.

The current account deficit in the first 10 months of the year stood at $7.6 billion.

Foreign direct investment totaled $1.8 billion in October, sharply down from $8.2 billion a year ago, the central bank said, adding that it forecasts FDI of $1 billion in November.

READ ALSO: Analysis: Brazil faces $112 billion refinancing cliff in early 2021

On the portfolio side, Brazil posted an overall net inflow of $5.5 billion into domestic stocks and bonds last month, comprised of $2.8 billion into stocks and $2.7 billion into bonds.

Inflows have returned in recent months, but so far this year a net $21.6 billion has been pulled from domestic markets, the central bank said, and $27.4 billion has been pulled in the last 12 months.

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