Brazil’s current account deficit compensated by heavy FDI during April
Brazil's monthly current account deficit rose sharply in April as the country's trade surplus faded and profit remittances and foreign travel costs increased, the Brazilian Central Bank said Thursday.
Brazil posted an April current account deficit of 5.4 billion dollars, up from 3.3 billion in March. The 12-month current account deficit also advanced, this time to 51.6 billion from 49.8 billion as of March.
The 12-month current account deficit as of April was equal to 2.04% of GDP, the central bank said, up from 2.0% as of March. The April figure was still well below the 3.0% level considered worrisome by most Brazilian economists.
The current account deficit rose in April on the heels of a decline in the country's trade position, with April showing a trade surplus of only 881 million dollars, down sharply from 2.02 billion in March. Brazilian imports have continued to rise in recent months on a wave of consumer buying.
Similarly, well-heeled Brazilians continued their foreign travels in April, with net outflows from travel accounts reaching 1.25 billion, up from 997 million in March. The spending spree on imports and foreign travel comes as job opportunities and incomes continue to rise, according to economists.
Multinational companies also contributed to the rise in the current account deficit in April, sending 2.42 billion out of the country in profit and dividend remittances. That figure was up from 2.0 billion in March.
But foreign direct investment also continued heavy in April, reaching a net inflow of 4.67 billion for a net 12-month inflow of 63.2 billion, which more than covers the current account deficit. Net foreign direct investment in March was 5.9 billion for a 12-month total of 64.1 billion dollars.