Foreign direct investment in the country and external account deficit fall from January to August, says BC
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Foreign investment fell 36% from January to August, to US$37.9 billion. The deficit in external accounts, in turn, fell 30%, to US$ 19.5 billion, according to the Central Bank. Direct foreign investments in the Brazilian economy and the external account deficit fell in the first eight months of this year, the Central Bank reported this Monday (25). In the case of direct investment, the drop was 36%, to US$37.9 billion in 2023. In the same period last year, they had totaled US$59.2 billion. In August alone, according to the institution, direct investments in the country totaled US$4.27 billion, compared to US$10 billion in the same month of 2022. The entry of investments into the country is generally related to the behavior of the Domestic Product Gross (GDP) — which has been registering a slowdown due to the rise in the economy’s basic interest rates. Currently, to contain inflationary pressures, the rate is at 13.25% per year. After an increase of 5% in 2021, Brazilian GDP grew by 2.9% last year. The financial market projection for this year is for a similar rate of expansion. The Central Bank estimates an inflow of US$75 billion in direct foreign investment into 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$80 billion in direct investments in 2023. External accounts Still according to the BC, the deficit in external accounts also showed a drop in partial of the first eight months of this year, when it totaled US$ 19.45 billion. The decline was 30% compared to the same period in 2022 (-US$27.74 billion). The result in current transactions, one of the main indicators of the country’s external sector, is formed by the trade balance (trade of products between Brazil and other countries), services (purchased by Brazilians abroad) and income (interest remittances, profits and dividends from Brazil abroad). In August, according to the Central Bank, external accounts recorded a loss of US$778 million, compared to a negative result of US$7.01 billion in the same period last year. According to the BC, the drop in the negative balance of external accounts, in this year’s partial, is mainly related to the improvement in the trade balance in the period. There was also an improvement in the service bill this year. However, income remittances abroad increased. The Central Bank projects a US$45 billion hole in external accounts this year. Spending by Brazilians abroad Brazilian spending abroad totaled US$ 1.27 billion in August this year, an increase compared to the same month last year – when it totaled US$ 1.05 billion. This is also the highest value of expenses abroad, for the months of August, since 2019, that is, before the Covid-19 pandemic, when it totaled US$ 1.31 billion. In the first eight months of this year, expenses abroad totaled US$9.73 billion, compared to US$8.08 billion in the same period of 2022. Brazilians’ expenses outside the country are influenced by factors such as the level of economic activity – which shows a further slowdown this year – and the price of the dollar, used in international transactions. In 2022, the North American currency closed down 5.3%, quoted at R$5.28. Despite this, it still remained well above the 2019 level, ending that year at R$4.01. This Friday (22), the dollar closed at R$4.93 (see more quotes).
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