Economy

Brazil posts smallest current account deficit in 13 years, FDI inflows jump

share of the economy shrank to its smallest in 13 years and billions of dollars of corporate and financial investment poured into the country.

Brazilian currency
Photo: Shutterstock
  • Foreign direct investment (FDI) totaled $9 billion, the highest monthly inflow since August 2019;
  • That would be Brazil’s first annual surplus since recording a slender $408 million surplus in 2007.

Brazil‘s balance of payments position improved in February, figures showed on Friday, as the current account deficit as a share of the economy shrank to its smallest in 13 years and billions of dollars of corporate and financial investment poured into the country.

The current account deficit of 0.48% of gross domestic product in the 12 months to February was down from 0.65% the previous month and the smallest since February 2008, central bank figures showed.

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Foreign direct investment (FDI) totaled $9 billion, the highest monthly inflow since August 2019, while investors plowed $3.6 billion into Brazilian stocks and bonds, the ninth consecutive month of net portfolio inflows.

The current account deficit in the month was $2.3 billion, in line with the median forecast of a $2.4 billion shortfall in a Reuters poll of economists. That was down from a $4.7 billion deficit a year ago.

The figures for February come a day after the central bank revised its 2021 current account forecast to a $2 billion surplus from a $19 billion deficit. That would be Brazil’s first annual surplus since recording a slender $408 million surplus in 2007.

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The $9 billion FDI inflow in February was more than the $6.1 billion forecast in a Reuters poll, and sharply up from $2.6 billion the same month last year, the central bank said.

Based on partial data so far for March, the central bank expects FDI totaling $7 bln this month and a current account deficit of $1.3 bln. On Thursday the central bank maintained its expectations for $60 billion FDI inflows this year.

Net portfolio investments into Brazil totaled $3.6 billion in February, the ninth consecutive month of inflows, the central bank said. Of that, $822 million went into stocks and $2.8 billion into debt securities.

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