Brazil's current account deficit narrowed in June from a year ago, central bank data showed on Tuesday, although the Latin American giant may still be unable to cover that gap this year with direct investment from abroad. The country posted a current account gap of $3.593 billion in June, below an expected deficit of $4.8 billion, according to the median forecast of 13 analysts in a Reuters survey. The forecasts for the projected deficit ranged from $5.6 billion to $4.2 billion.
In June 2012, Brazil had a deficit of $4.4 billion. The current account is a country's broadest measure of foreign transactions encompassing trade, profit remittances, interest payments and other items. So far this year, the country has accumulated a current account gap of $43.478 billion, well above the $25.244 billion posted in the same period a year ago.
That widening gap also helps explain the Brazilian currency's sharp depreciation over the last few months, which was exacerbated by expectations of a scale back in US monetary stimulus that triggered an exodus of capital from emerging-market nations. Although foreign direct investment in the country jumped to $7.17 billion in June from $3.88 billion in May, it will still fall short of what is needed to cover the current account gap this year. In the first six months of the 2013, the country received $30 billion in FDI.
Last month, the central bank revised up its current account deficit estimate for the year to $75 billion, acknowledging for the first time in years that FDI is unlikely to cover that gap. The bank expects FDI to reach $65 billion in 2013. Still, the central bank has said other dollar inflows will easily help cover the remaining deficit. In the 12 months through June, the current account deficit was equivalent to 3.17 percent of gross domestic product, down from 3.2 percent in May. A fall in the price of some Brazilian exports plus a hefty bill for imported fuel has led Brazil to accumulate a trade deficit of nearly $3 billion this year.
Comments
Comments are closed.