Export slump fuels widest Brazil current account deficit in years
By Marcela Ayres and Jamie McGeever
BRASILIA, Aug 26 (Reuters) - Brazil's balance of payments position with the rest of the world deteriorated sharply in July, central bank figures showed on Monday, as the current account deficit unexpectedly ballooned to $9 billion, the biggest July shortfall since 2014.
That pushed out the broadest measure of the Brazil's deficit with the rest of the world to 1.31% of gross domestic product, the widest deficit in two and a half years, the central bank said.
The deficit continues to be adequately funded, however, by strong capital inflows from abroad, the data showed.
The main driver behind the unexpectedly weak current account data was an 11.1% slump in goods exports, to $20 billion in July, which cut the trade surplus by more than half and will also likely act as a drag on overall growth in the third quarter.
The $9 billion gap between what Brazil sells to and buys from the rest of the world, including trade and financial flows, was more than double the $4.4 billion deficit posted in July last year and much wider than the $5.9 billion median forecast in a Reuters poll of economists.
July's data brings the accumulated current account deficit over the previous 12 months to $24.4 billion - the first time it has exceeded $20 billion since February 2017. The deficit as a share of GDP was the widest since the 1.32% deficit posted in January 2017.
Foreign direct investment totaled $7.66 billion in July, slightly more than a Reuters poll estimate of $7.00 billion, bringing the total so far this year to $45 billion. That is up sharply from $38.4 billion in the same period a year ago.
In the first seven months of this year, Brazil's current account deficit totaled $21.68 billion, much more than the $12.26 billion in the same period last year.
(Reporting by Marcela Ayres Writing by Jamie McGeever Editing by Chizu Nomiyama and Dan Grebler)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.