São Paulo – Net foreign direct investment (FDI) flow into Brazil stood at US$ 7.17 billion in June, up 23% from June 2012, according to figures released this Tuesday (23rd) by the Central Bank. In the first half this year, FDI inflow exceeded US$ 30 billion, up 1% from the first half of 2012.
The monthly inflow was sufficient to offset the near-US$ 4 billion current account deficit recorded in June. However, first-half FDI was not enough to counter the current account deficit during the period, which was US$ 43.5 billion, equivalent to 3.82% of the Gross Domestic Product (GDP). The first-half deficit was an all-time high.
According to the Central Bank, in the first half the trade balance posted a US$ 3 billion deficit, the services account posted a US$ 22 billion deficit and the income account posted a US$ 19.77 billion deficit.
According to Agência Brasil , the head of the Central Bank’s Economic Department, Tulio Maciel, has said that in the first half, higher economic activity compared with 2012 led to increased demand for foreign goods and services.
One of the factors which contributed to the current account deficit was increased spending by Brazilians in foreign countries, which amounted to nearly US$ 2 billion in June, the highest ever for the month. Year-to-date, Brazilians spent US$ 12.33 billion abroad, an all-time high for the period.
This took place in spite of the appreciation of the US dollar against the real throughout the first half, which theoretically makes international air tickets, services, and overseas shopping more expensive to Brazilians. Maciel has said, according to Agência Brasil , that exchange rate modifications do not take effect immediately, because foreign travel is usually planned beforehand. “There is a planning period, and that causes a lag between spending and exchange rate fluctuations,” he said.
On the other hand, foreigners spent US$ 453 million in Brazil in June this year, as against US$ 462 million in June 2012. In the first half, spending by foreigners in Brazil stood at US$ 3.479 billion, as against US$ 3.471 billion in the first half of 2012.
According to Agência Brasil, Maciel said “no change” has been detected in concerning spending by foreigners in Brazil during the Confederations Cup, held in June. “There was no visible impact,” he said.
*Translated by Gabriel Pomerancblum
