BRASÍLIA: Brazil’s external balances are expected to flatten soon, given that imports are stabilizing. Last year, Brazil’s current account balance improved to a deficit of USD 58.9 billion from a deficit of USD 104.2 billion in 2014. In other words, the current account deficit came in at 3.1 percent of the GDP in 2015 from 4.3 percent of GDP in 2014.
The nation’s current account deficit has continued to rebound in 2016 as well, and the four quarter accumulated balance came in at -1.3 percent of the GDP through the third quarter of 2016. This year, the current account to GDP ratio has also rebounded as the Brazilian real’s appreciation has raised dollar GDP sharply; however, it might have also added to lower export growth in recent months, noted Societe Generale in a research report.
Brazil’s exports continue to face challenges from external demand, whereas imports might stabilize if investment demand continues to rebound. Hence, the phase of trade and current account balance improvements might come to an end soon. “In October, we expect the CAB to improve by USD 1,050m yoy to – USD 1,598m based on a yoy gain of USD350m in the trade balance”, said Societe Generale. Thus, the year-to-date current account balance is expected to have improved to USD 17 billion from USD 53 billion for the same period in 2015. The current account balance to the GDP ratio is expected to come in at 1.3 percent this year, added Societe Generale.
