Brasília – Foreign direct investment (FDI) should cover approximately 80% of Brazil’s current account deficit (exports and imports), according to the head of the Brazilian Central Bank’s Economic Department, Tulio Maciel. Besides, companies have access to foreign loans and inbound investment in stocks is taking place. To him, the country continues being targeted by quality investment.
Year-to-date through August, Brazil posted a US$ 54.818 billion current account deficit, as against a US$ 57.627 billion deficit in the same period of 2013. The Central Bank has maintained its 2014 deficit projection at US$ 80 billion. The deficit should be equivalent to 3.52% of Brazil’s Gross Domestic Product (GDP), i.e. the sum of all goods and services produced in the country, as against a 3.48% forecast in June.
Whenever a country posts a current account deficit, meaning that spending exceeds earnings, it must offset the result via foreign investment or loans contracted abroad. FDI, i.e. investment into the country’s productive sector, is considered the best mode of financing because it is long term. There are other forms of financing, however, such as loans and foreign investment in stocks and fixed income bonds. The Central Bank’s FDI projection for this year is US$ 63 billion.
*Translated by Gabriel Pomerancblum
