Brazil likely to have recorded current account deficit of $1020 million in August

Brazil’s external balances are expected to flatten sooner than anticipated given that imports are stabilizing, according to Societe Generale. The current account balance rebounded in 2015 to a deficit of USD 58.9 billion from 2014’s deficit of USD 104.2 billion, which is -3.1 percent of GDP in 2015 and -4.3 percent of GDP in 2014.

The current account balance continued to rebound at a sharp rate early in 2016 as well. However, given that exports continue to face external demand headwinds and imports seem to stabilize, the phase of trade and current account balance improvements might be over sooner than anticipated.

For the first time in two years, imports grew in August, while exports returned to positive growth following consecutive drops in June and July. But the year-on-year trade balance improvement decelerated. A similar trend for the overall current account balance in August is expected at a deficit of USD 1020 million, noted Societe Generale.

Thus, the year-to-date current account balance is likely to improve to a deficit of USD 13.6 billion from a deficit of USD 46.2 billion for the same period last year.

“Looking ahead, the current account balance projection for the full year could fall short of our current expectation of -1.3% of GDP”, added Societe Generale.