Brazil current account deficit 1.37% of GDP, smallest since April 2018

BY Reuters | ECONOMIC | 10/23/20 09:46 AM EDT

By Jamie McGeever

BRASILIA, Oct 23 (Reuters) - Brazil's balance of payments position with the rest of the world improved in September, figures showed on Friday, as the sixth current account surplus in a row helped narrow the 12-month accumulated deficit to its smallest in more than two years.

A widening trade surplus and narrowing of the primary income and service sector deficits were behind the overall current account surplus of $2.3 billion, the central bank said, adding that it forecasts a surplus of $1.2 billion for October.

September's surplus was less than the $3.0 billion forecast in a Reuters poll of economists, but enough to narrow the deficit over the preceding 12 months as a share of gross domestic product to 1.37%, the smallest since April 2018.

With the balance in the first nine months of the year at a $6.5 billion deficit, Brazil could yet post its first annual surplus since 2007.

September marked the sixth monthly surplus in a row since the onset of the COVID-19 pandemic, something not seen since 2006. Again, it was largely driven by imports falling faster than exports.

Goods exports in September fell 9.1% from the same month last year to $18.5 billion, the central bank said, while imports fell 23.3% to $13.1 billion. So far this year, exports have fallen 7.5% and imports have slumped 13.7%.

Brazil's services deficit shrank by 35% from a year earlier to $1.6 billion, with the pandemic crushing international travel expenditure by 85%, the central bank said.

Foreign direct investment totaled $1.6 billion in September, the central bank said, adding that it forecasts net FDI of $1.0 billion in October.

On the portfolio side, Brazil posted an overall net inflow of $1.2 billion into domestic stocks and bonds last month, with $2.2 billion inflow into bonds compensating for a $972 million outflow from stocks.

Inflows have returned in recent months, but so far this year a net $27 billion has been pulled from domestic markets, the central bank said, and $37 billion has been pulled in the last 12 months. (Reporting by Jamie McGeever; editing by Jonathan Oatis)

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