Foreign investment and external account deficit retreat in February, shows Central Bank
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Information was released this Monday (27) by the Central Bank. Spending by Brazilians abroad had a slight increase, but is still below what was registered before the Covid-19 pandemic. Direct foreign investment in the Brazilian economy and the deficit in the external accounts retreated in February. The figures for February this year were released this Monday (27th) by the Central Bank. According to the institution, foreign direct investments in the Brazilian economy totaled US$ 6.45 billion last month of this year, which represents a 40% drop compared to the same month of 2022 (US$ 10.79 billion) . In the first two months of this year, figures show that investments totaled US$ 13.32 billion, also down on the same period in 2022 (US$ 15.89 billion). The inflow of investments into the country is generally related to the behavior of the Gross Domestic Product (GDP) — which has been registering 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$ 80 billion in direct investments in 2023. External accounts At the same time, still according to BC data, the country’s external accounts recorded a $2.81 billion deficit in February. This represents a drop compared to February 2022 — when the negative result amounted to US$ 4.15 billion. In the first two months of 2023, the gap in the external accounts totaled US$ 11.89 billion, against a deficit of US$ 13.55 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). According to the BC, the drop in the external account deficit in February is mainly related to a lower negative result in the service account (which includes travel abroad) and lower income remittances (made by multinationals). The Central Bank projects a deficit of US$ 49 billion in the external accounts this year. Spending by Brazilians abroad Spending by Brazilians abroad totaled US$ 868 million in February this year, with a slight increase compared to the same month last year – when it totaled US$ 805 million. This was also the highest value for a month since February 2020, shortly before the outbreak of the Covid-19 pandemic, when expenses abroad totaled US$ 881 million. Despite the improvement, spending by Brazilians abroad has not yet returned to a level of normality. In February 2018 and 2019, for example, these expenses totaled US$1.4 billion and US$1.3 billion, respectively. In addition to the pandemic, the expenses of Brazilians abroad are also influenced by other factors, such as the level of economic activity and the price of the dollar, used in international transactions. In 2022, the US currency closed down 5.3%, quoted at R$ 5.2780. Despite this, it still remained well above the 2019 level – it ended that year at BRL 4.0098. This Monday, the dollar was trading at R$5.25 at 9am. 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 0.90%.
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