According to a report released by the Central Bank (BC), Brazil’s current account deficit widened more than expected and foreign direct investment decreased in April as a weakening global economy hit Brazilian exports and prompted companies to repatriate more profits abroad.
The current account deficit reached US$ 5.4 billion, the worst data since 1947 and more than the US$4 billion estimated by the market. Along with a weak trade surplus (US$ 882 million), the robust (and much more than expected) remittance of profits and dividends (USD 2.4 billion – see below) contributed to this significant deficit. Over 12 months, the current account gap widened to USD 51.8 billion, or 2.05% of GDP (up from 1.99% in March).
The current account, the broadest measure of a country’s foreign transactions in its balance of payments, indicates how reliant an economy is on financing from foreign capital. Strong capital inflows from foreign investors have helped Brazil cover its current account deficit in recent months.