Brazil's current account deficit widens in September as trade surplus shrinks

BRASILIA, Oct 29 (Reuters) -

Brazil posted a wider-than-expected current account deficit in September, primarily driven by a sharp drop in the trade surplus, central bank data showed on Tuesday.

Latin America's largest economy recorded a current account deficit of $6.5 billion last month, exceeding the $5 billion deficit forecast in a Reuters poll of economists. It had posted a $268 million surplus in the same month last year.

The outcome was mainly due to a surge in imports amid

robust

economic activity, resulting in a much smaller trade surplus of $4.8 billion - down from $8.5 billion in September 2023.

Reflecting the economic momentum, the services account deficit also rose by $1.5 billion year-on-year to reach $5 billion. The factor payments account deficit increased by the same amount, reaching $6.5 billion.

Foreign direct investment in the month totaled $5.2 billion, below the $5.6 billion predicted in the Reuters poll.

The central bank also reported a net inflow of $3.1 billion in portfolio investments in the domestic market, with $4.3 billion entering in bonds, more than offsetting the $1.3 billion outflow from stocks and investment funds.

Over 12 months, the current account deficit rose to 2.07% of gross domestic product (GDP) but remained comfortably covered by FDI, which amounted to 3.2% of GDP. (Reporting by Marcela Ayres; Editing by Gabriel Araujo)