Brazil’s present account deficit widens in December, deteriorates in 2024

BRASILIA (Reuters) – Brazil closed 2024 with a present account deficit equal to 2.55% of gross home product (GDP), the central financial institution mentioned on Friday, greater than double the extent seen within the earlier yr after reporting a shortfall in December.

The deterioration was primarily attributed to a shrinking commerce surplus, as import progress contrasted with decreases in exports amid a stronger-than-anticipated efficiency of Latin America’s largest economic system, which constantly exceeded expectations all year long.

In accordance with the central financial institution, Brazil’s commerce surplus fell by 28.2% to $66.2 billion, reflecting a 1.2% decline in exports alongside a 8.8% rise in imports.

Additionally pushed by sturdy financial exercise, the companies account deficit grew by 24.7% within the yr, reaching $49.7 billion, additional contributing to the present account deterioration.

In distinction, the issue funds deficit narrowed by 5.1%, the central financial institution mentioned, influenced by diminished revenue and dividend outflows.

The December present account deficit reached $9 billion, whereas overseas direct funding (FDI) for the month totaled $2.8 billion.

For the yr, FDI reached $71.1 billion, equal to three.24% of GDP, marking a 13.8% improve from the earlier yr.

The central financial institution additionally reported that portfolio investments within the home market posted web outflows of $4.3 billion in 2024, pushed by web outflows of $17.1 billion in equities and funding funds, partially offset by web inflows of $12.8 billion in debt securities.

In December alone, portfolio funding web outflows reached $12.6 billion amid a pointy rise within the threat premium on Brazilian belongings after the federal government unveiled a fiscal package deal that upset buyers involved concerning the rising trajectory of public debt.

This was the second-worst month-to-month consequence within the central financial institution’s collection, which started in 1995, surpassed solely by the $22.1 billion outflow in March 2020, when the COVID-19 pandemic was declared.