Deficit of external accounts and inflow of foreign investment retreat until May, says BC

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Numbers were released this Monday (26) by the Central Bank. Spending by Brazilians abroad totaled US$ 1.2 billion last month. The external account deficit and the inflow of foreign direct investment into the Brazilian economy declined in the first five months of this year, informed the Central Bank this Monday (26). According to the institution, external accounts registered a shortfall of US$ 12.64 billion from January to May, compared to a negative result of US$ 21.09 billion in the same period last year. The result in current transactions, one of the main indicators of the country’s external sector, is formed by the trade balance (trade in products between Brazil and other countries), services (acquired by Brazilians abroad) and income (remittances of interest, profits and dividends from Brazil abroad). In May alone, the external accounts showed a surplus of US$ 649 million, against a deficit of US$ 4.63 billion in the same month of 2022. According to the BC, the fall in the negative balance of the external accounts, in part of that year , is mainly related to the improvement in the trade balance in the period. The Central Bank projects a deficit of US$ 49 billion in the external accounts this year. Foreign investments At the same time, according to BC, direct foreign investments in the Brazilian economy also registered a drop in the first five months of this year, to US$ 29.69 billion. In the same period last year, they totaled US$ 37.82 billion. In April alone, still according to the institution, direct investments in the country totaled US$ 5.38 billion, against US$ 3.96 billion in the same month of 2022. The inflow of investments in the country is usually related to the behavior of the Gross Domestic Product (GDP) — which has been recording a slowdown due to the rise in basic interest rates in the economy. Currently, to contain inflationary pressures, the rate is at 13.75% per year, the highest level in over six years. The Central Bank estimates an inflow of US$ 75 billion in direct foreign investment in the Brazilian economy this year. The financial market, in a survey conducted by the BC last week with more than 100 institutions, estimates an inflow of US$ 78.8 billion in direct investments in 2023. Spending by Brazilians abroad Spending by Brazilians abroad totaled US$ 1 .2 billion in May this year, up from the same month last year – when they totaled US$ 1.09 billion. Spending by Brazilians abroad has not yet returned to pre-pandemic normality. In March 2018 and 2019, for example, these expenses totaled US$1.52 billion and US$1.32 billion, respectively. In the first five months of this year, expenses abroad totaled US$ 5.66 billion, against US$ 4.78 billion in the same period of 2022. Brazilians’ expenses outside the country are influenced by factors such as the level of economic activity and the dollar price, used in international transactions. In 2022, the US currency closed down 5.3%, quoted at R$ 5.28. Despite this, it still remained well above the 2019 level – it ended that year at R$ 4.01. Last Friday (23), the dollar closed at R$ 4.77. See more quotes The level of activity is already slowing down with the rise in basic interest rates in the economy. After an increase of 5% in 2021, the Brazilian GDP grew by 2.9% last year. And, for 2023, the market projection is for an even smaller expansion, of 2.18%.

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