International capital inflow to Brazil exceeds forecasts

Brazil posted a surprise current account deficit in April, central bank data showed on Monday, although as a share of national economic output Brazil’s balance of payments shortfall with the rest of the world is showing signs of stabilizing.

International capital continued to flow into Brazil too, with foreign direct investment exceeding forecasts and, measured as a share of the economy over a cumulative 12-month basis, hitting its highest level since 2001.

The US$62 million current account deficit was well short of a median forecast of economists of a US$ 450 million surplus, as the services deficit widened 11.9% to US$3 billion and other services-related income fell 18% to US$1.1 billion.

But in the year to April, the deficit was little changed at US$ 13.7 billion and held steady at 0.73% of gross domestic product, the central bank said.

According to the latest central bank ‘FOCUS’ survey of around 100 financial institutions published on Monday, investors expect Brazil will post a current account deficit of US$25 billion this year. An anticipated trade surplus of just over US$ 50 billion will be wiped out by a shortfall in financial payments.

The balance of payments deficit continues to be funded by strong capital inflows, central bank data showed. FDI in April nudged US$ 7 billion, up from US$ 6.8 billion in March. The central bank estimated that FDI in May will rise even further, up to US$7.5 billion.


Source: MercoPress.