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Brazil’s April current account deficit a new record pushed by negative trade balance

Monday, May 27th 2013 - 08:22 UTC
Full article 9 comments
Falling commodities’ prices and imported fuel have a great influence  Falling commodities’ prices and imported fuel have a great influence

Brazil posted another hefty current account deficit in April as its traditional trade surplus has turned into a deficit this year and foreign companies are repatriating more of their profits, according to central bank data.

The current account gap in April reached 8.318 billion dollars, the largest for the month since the beginning of the central bank data series in 1980.

The country's current account deficit in March was 6.873 billion dollars, the central bank said last month.

In the 12 months through April, the current account deficit was equivalent to 3.04% of GDP, the highest in over a decade.

“The deteriorating current account dynamics are an increasing source of concern to investors,” Alberto Ramos, an analyst with Goldman Sachs, said in a note to clients. He said he expected the deficit to widen to 70 billion this year, above the central bank estimate of 67 billion.

In the first four months of the year, the current account deficit has nearly doubled to 33.176bn from the same period a year earlier.

A mounting bill for imported fuel and a fall in the price of commodities has led Brazil to accumulate a trade deficit of 6.15bn dollars in the first four months of 2013, a sharp contrast to the 3.299bn surplus recorded in the same period last year.

Adding to the current account deficit, companies operating in Brazil repatriated 2.5 billion in profits and dividends to their headquarters abroad, 5.1% more than in April 2012.

In recent years, Brazil's current account deficit was mitigated by a strong inflow of foreign direct investment, or FDI. After a jump in late 2010, though, FDI has stagnated, prompting economists to question how long foreign investment could continue to make up for the current account shortfall.

At the moment, and despite the stagnation, FDI remains relatively robust. It reached 5.720 billion in April. The central bank has forecast a current account deficit of 67 billion in 2013 and FDI of 65 billion.

Categories: Economy, Politics, Brazil.
Tags: Brazil.

Top Comments

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  • ChrisR

    The stagnation in foreign investment which started in mid 2011 was in direct response to Mantega lying about record growth rates when it turned out to be no such thing. That was a surprise NOT!

    And, if you consider the trend (albeit on very few plot points) the 67 Billion looks decidedly wrong.

    The giveaways to ethanol and the auto industry have worked against Brasil for obvious reasons which I have explained on a number of passed posts.

    Only a real clear out of the finance ministry, starting with the Minister himself, will even BEGIN to make a difference.

    Without very high foreign money flows into Brasil ALL the infrastructure improvement programmes announced by Dilma will be at risk. Does Brasil really want to sell itself to the Chin?

    On a final note, I do hope the fact that foreign investors are repatriating more profits back home does not result in a Cristina type fuck-up response by Dilma. That really would be a negative action.

    May 27th, 2013 - 01:57 pm 0
  • cornelius

    ChrisR ,There is a danger that she will act like Argentina she o ready started controlling the price of electricity that was a sign that she will take measures like any socialist communist they can help their nature will overcome to show her true worker party membership that she is, her pride in maintaining a popular policy to gain politically will come true or Brazil will swing to the right like they never before.

    May 28th, 2013 - 01:07 am 0
  • yankeeboy

    As I have said, Brazil ( and Argentina) is going back to the economies of the 70s.
    It has not learned ANYTHING in the last decade and will slip right back to devaluation and hyperinflation if they are not careful and fix this problem immediately.
    They have fundamental/societal problems that need to be fixed first before they will ever see real and sustained growth.
    There are just too many poor and lazy people for them to ever be considered a world player in our lifetime.

    May 28th, 2013 - 12:25 pm 0
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