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Brazil: Current account deficit widens in 2018

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Staff Writer | January 29, 2019
Brazil’s current account balance came in at a deficit of USD 815 million in December, a smaller shortfall than the USD 2.1 billion deficit recorded in the same month of 2017.
Brazil manufacturing
LatAm   The improvement was due chiefly to a higher trade surplus
The improvement was due chiefly to a higher trade surplus, which came in at USD 6.2 billion in December (December 2017: USD 4.6 billion).

Meanwhile, foreign direct investment jumped to USD 9.0 billion in December, above the USD 3.1 billion recorded in the same month of the previous year.

Despite December’s result, the current account deficit widened in 2018 as a whole.

The current account deficit grew from 0.4% of GDP in 2017 to 0.8% of GDP.

A fall in the trade surplus was chiefly behind the result as imports ballooned to over 20% due to government tax incentives and recovering household spending.

That said, the result is still positive overall, and the economy managed to attract a solid USD 88.3 billion in FDI in the year, or approximately 4.7% of GDP.

Analysts who participated in this month’s LatinFocus Consensus Forecast expect a current account deficit of 1.3% of GDP in 2019.

For 2020, panelists expect the current account deficit to widen to 1.7% of GDP.