Brazil account surplus soars, FDI plunges

Brazil's current account surplus nearly tripled in September from August as strong exports girded South America's largest economy against financial shocks, central bank figures showed on Friday.
But the level of foreign direct investment (FDI) in September was the worst total for any month in a decade and some analysts said political instability and regulatory conditions in Brazil had diverted some investment to other emerging markets like China, India and Russia.
The surplus in the current account balance of payments, the widest measure of a country's international transactions, widened to $2.38 billion in September from $822 million in August and was the second highest for any month on record.
The September result was in line with analysts' estimates, which ranged between $2 billion and $2.6 billion.
"The trade surplus has been more than enough to balance a deficit in the services and income account caused by repatriation of profits and dividends," said Cristiano Souza, an economist at the MCM consultancy in Sao Paulo.
Current account deficits long exposed Brazil to financial shocks and forced the country to float its currency, the real, in 1999.
Brazil expects to post a current account surplus in 2005 for the third straight year thanks to booming exports.
The 12-month current account surplus through September was 1.78 percent of gross domestic product, compared with 1.73 percent in the same period to August.
Brazil's trade surplus increased 17 percent in September to $4.3 billion from August, according to the trade ministry.
Soaring prices for key farm products such as sugar, coffee and meats have helped shore up the dollar value of exports even though the country's agricultural sector complains a four-year-high real is reducing its profits.
The picture was less positive for FDI, which plunged to $43 million in September from $1.14 billion in August and $646 million in September 2004. It was the lowest level of monthly FDI in more than a decade.
Analysts had expected FDI between $300 million and $800 million.