Brazil posts narrower current account deficit in August

SAO PAULO, Sept 26 (Reuters) - Brazil posted a smaller-than-expected current account deficit in August, but foreign direct investment remained insufficient to fully offset the 12-month shortfall as a share of gross domestic product, central bank data showed on Friday.

Latin America's largest economy recorded a current account deficit of $4.7 billion in August, smaller than the $5.5 billion shortfall expected by economists in a Reuters poll.

As a result, the 12-month deficit narrowed to 3.51% of GDP, from 3.66% in the previous month. Still, it remained sharply higher than the 1.95% deficit registered a year earlier.

Foreign direct investment, meanwhile, was roughly $8 billion in August, surpassing expectations of $6.15 billion in the Reuters survey.

However, over 12 months FDI dropped to 3.18% of GDP, from 3.22% in July. It fell short of covering the annual current account deficit for the seventh straight month, underscoring a weaker outlook for Brazil's external finances. (Reporting by Fernando Cardoso; Editing by Gabriel Araujo and Joe Bavier)