Brazil foreign accounts stand at negative $5.7 bi in September

Current transactions—purchases and sales of goods and services and income transfers with other countries—had a negative balance of $5.678 billion in September this year. In the same month last year, the deficit stood at $1.921 billion. The figures can be found in the Central Bank’s External Accounts report, out on Monday (Oct. 24).

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Year on year, a reduction of $196 million was seen in the balance of trade for goods and surges of $536 million and $3.1 billion were reported in the deficits for services and for primary income (profits and dividends), respectively, from September 2021.

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In the 12 months ending in September, the deficit in current transactions is $46.153 billion, 2.56 percent of the gross domestic product (GDP), against the negative balance of $42.397 billion (2.38 percent of the GDP) in the 12 months ending in August 2022. In the 12-month period ending in September 2021, the deficit stood at $23.428 billion (1.49 percent of GDP).

Year to date, the deficit sits at $29.583 billion, compared to a negative $11.356 billion from January to September 2021.

Direct investment

When the country posts a negative balance in current transactions, it needs to cover the deficit with investments or loans abroad. The best way to settle the negative balance is through direct investment in the country—IDP in the Portuguese acronym—as the funds are put toward the productive sector and are usually long-term investments.

Net inflows in direct investments in the country totaled $9.185 billion last month, compared to $4.600 billion in September 2021. This is the highest net inflow for September since 2017, when it reached $9.3 billion.