Brasília – The Brazilian trade deficit in January caused the current account deficit to reach an all-time high. As per figures released this Friday (21st) by the Central Bank, the current account deficit stood at US$ 11.591 billion in January, up 2.1% from January 2013. It was the highest monthly deficit ever.
In the last 12-month period, the current account deficit stood at US$ 81.6 billion, equivalent to 3.67% of the Gross Domestic Product (GDP). The figure is higher than December 2013’s US$ 81.4 billion, which amounted to 3.66% of GDP.
According to the Central Bank, the main reason for the performance was the record-high trade deficit of US$ 4.058 billion in January, the worst monthly result since 1994. Traditionally, Brazil posts deficits in the services and income accounts.
The only reason the country’s foreign exchange reserves, currently at US$ 375 billion, did not plummet last month is that financial operations, including foreign direct investment (FDI) and individual foreign investment in Brazil, has offset the current account deficit. In January, financial operations saw a net inflow of US$ 14.070 billion. Of those, US$ 5.098 billion consisted of FDI inflows.
Despite the January figures, the Central Bank is expecting the current account deficit to decline this year. According to the bank’s projections, the current account deficit should be US$ 78 billion by the end of 2014, as against US$ 81.4 billion by the end of 2013. The bank expects the trade balance to rebound in the next few months, and is expecting a US$ 10 billion surplus in 2014, as against a US$ 2.5 billion surplus in 2013.
*Translated by Gabriel Pomerancblum
