Tuesday, February 26th 2013 - 10:46 UTC

Brazil: current account deficit outpacing FDI expected to continue for two months

Brazil’s current account deficit surged to a record high in January, outpacing foreign direct investment for the third straight month because of the widening trade gap according to central bank data.

Maciel: FDI flows usually slow at the start of the year, but pick up throughout the year.

Brazil posted a current account deficit of 11.37 billion dollars in January ahead of the 8.4bn deficit registered in December.

The large gap had been expected due to a soaring trade deficit, which hit an all-time monthly high of 4.4bn in January. Behind the surging trade deficit was an accounting change which tallied billions of dollars of fuel imports from 2012 in this year's balance, trade officials said.

The widening gap between the current account Deficit and Foreign Direct Investment (FDI) has raised the question of whether Brazil can continue to cover the shortfall with FDI, whose growth has stagnated since a jump in late 2010.

Foreign direct investment in Latam's largest economy was 3.7bn in January, down from a previously reported 5.36bn in December.

The central bank's head of economic research, Tulio Maciel, said FDI flows usually slow at the start of the year, but pick up throughout the year. He expects the current account gap to outpace FDI yet again in February, but sees a reversal in that trend starting in March.

The country is expected to post trade deficits in February and March because of 2.9bn worth of fuel imports from 2012 that will be included in the balance of those months, trade officials said last month. The central bank expects FDI to fully cover a current account gap estimated at 65bn this year.

While Brazil has recently run a string of current account deficits, this has been amply compensated in Brazil's foreign accounts by massive foreign direct investment, which is tallied in the capital account of the balance of payments.

The current account deficit in the 12 months through January was equal to 2.58% of GDP, the central bank said, up from a previously reported 2.4% in December.

Adding to the current account gap in January was 1.6bn that Brazilians spent while travelling abroad and more than 2bn in profits and dividends that foreign companies repatriated to their headquarters abroad.

17 comments Feed

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1 Captain Poppy (#) Feb 26th, 2013 - 03:48 pm Report abuse
With deficits in the accounts and private and corporate credit dropping, Brazil looks like they are in serious shit.


And of course if Brazil is in serious shit, that does not hold well for all of South AMerican. And of course....China, the Bolivian Socialists Movements savior is not doing so well to come to their rescue either. Socialism without private businesses to steal from will not flourish.

2 ChrisR (#) Feb 26th, 2013 - 05:59 pm Report abuse
But who the hell were expecting anything other than these figures.

Messing with the market and telling lies to investors like Mantega has was bound to end in tears.

Mr. Market will have his way in the end: he always does and nothing the idiot Mantega can do will stop it.
3 Ayayay (#) Feb 26th, 2013 - 06:07 pm Report abuse
Foreign direct investment-aka Spain.

While at the same time on another part of the globe, A.pple and A.ndroid, is making a sheerly A.MAZING amount of money for the U.S.
4 Steve Folgers (#) Feb 26th, 2013 - 08:34 pm Report abuse
@ 1
Don't forget the USA=16 trillon dolars debt..tic tic tic
all in the same boat
5 ChrisR (#) Feb 26th, 2013 - 09:04 pm Report abuse
4 Steve Folgers

And don't forget the USD is the FIAT currency of the world.

Tic, tic now?

Ha, ha, ha.
6 Captain Poppy (#) Feb 26th, 2013 - 09:20 pm Report abuse
4 Steve Folgers (coffee?)

1-don't forget the USA pays it's creditors and are not awaiting an courtroom showdown. tic tic tic
2-WTF does that have to do with this article?
7 Ayayay (#) Feb 26th, 2013 - 09:20 pm Report abuse
@4 There is a difference between the wealth of the people and the wealth of a gov system. ESPECIALLY in a system with by far the lowest taxes in the developed world.

There's not even a federal sales tax.

The solution to the FEDERAL gov's problem is smaller fed.
8 Captain Poppy (#) Feb 26th, 2013 - 10:02 pm Report abuse
Ayayay......very good points.
9 Ayayay (#) Feb 26th, 2013 - 10:46 pm Report abuse
Thanks, Cap'n
10 row82 (#) Feb 26th, 2013 - 11:36 pm Report abuse
Support the campaign to keep the Falklands Free of Argentine Colonialism www.facebook.com/Britain1592?ref=hl
11 british boy (#) Feb 27th, 2013 - 03:15 am
Comment removed by the editor.
12 Anglotino (#) Feb 27th, 2013 - 05:55 am Report abuse
@11 Sussie

If living in the US is so bad perhaps you should move back to Argentina or even to Brazil! Sorry you probably won't be eligible to move Australia.... thankfully.
13 Captain Poppy (#) Feb 27th, 2013 - 01:44 pm Report abuse
Damn she always gets removed before I get a chance to read her rants. BTW, I find it highly unlikely she resides in the USA. I think she is a rogue troll....the Sussie Identity, The Sussie Ultimatum, The Sussie Supremacy and finally, who will be....The Sussie Legacy !!!
14 yankeeboy (#) Feb 27th, 2013 - 02:10 pm Report abuse
This guy has been all over lately saying don't worry about what we are seeing now all will be well by the end of the year.

I don't think anyone believes him

Brazil has to fix their inflation, corruption and taxation problems before they could ever be considered a legitimate country.
15 ChrisR (#) Feb 27th, 2013 - 04:50 pm Report abuse
14 yankeeboy

Maceil and Mantega both are denying Mr Market exists!

As we both know, this will end in tears if they keep on with the denial.
16 Donald Smith (#) Feb 28th, 2013 - 07:56 pm Report abuse
12 anglotino
this is the end of mercopress “hide and seek” “british military and agents”
Think just announced she is Isolde.
17 Captain Poppy (#) Feb 28th, 2013 - 09:16 pm Report abuse
#16 Sussie do you think an American or English sound name hides your crazy persona?

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