Leak in exterior accounts rises 46% till October and provides as much as US$ 44 billion, says Central Financial institution
In the same period, foreign investment in the Brazilian economy reached US$ 73.95 billion, the highest value in eight years, more than enough to finance the deficit in the external accounts.
The country’s external accounts registered a deficit of US$ 44 billion in the first ten months of the year, with an increase of 46.2% in comparison with the same period of last year (-US$ 30.1 billion). The information was released this Friday (25) by the Central Bank.
At the same time, however, direct foreign investment in the economy, the highest in seven years, was sufficient to “finance” the external account deficit (see more below in this report🇧🇷
The result in current transactions, one of the main indicators of the country’s external sector, is formed by the trade balance (trade in products between Brazil and other countries), services (acquired by Brazilians abroad) and income (remittances of interest, profits and dividends from Brazil abroad).
According to the BC, the increase in the external account deficit in the partial of 2022 is mainly related to a worsening in the service account (more spending abroad, including travel) and income (increase in remittances abroad by companies) .
In October alone, the deficit in external accounts added up to US$ 4.62 billion, against US$ 6 billion in the same month of last year.
For the whole year of 2022, the Central Bank expects the external accounts to deteriorate. The institution estimates a deficit of US$ 47 billion. If confirmed, it will be the biggest since 2019 (-US$ 65 billion), that is, in three years.
According to BC, foreign direct investments in the Brazilian economy totaled US$ 73.95 billion from January to October this year, which represents the highest level since 2014 (US$ 74.76 billion), that is, in eight years . BC’s historical series begins in 1995.
As a result, investments were more than sufficient to finance the external account deficit.
In October alone, the inflow of foreign investment into the country totaled US$ 5.54 billion, with growth in comparison with the same month of last year – when it totaled US$ 3.37 billion.
Already in twelve months, foreign investments totaled US$ 73.8 billion until October of this year, against US$ 71.6 billion in the previous month (September) and US$ 50 billion in October 2021.
In the whole of last year, foreign investment in the country totaled US$ 46.44 billion. The BC forecast, already outdated, was that, in 2022, they would reach US$ 66 billion.
Spending by Brazilians abroad
According to information from the Central Bank, spending by Brazilians on trips abroad totaled US$ 1.06 billion in October this year, up in comparison with the same month last year (US$ 531 million) – when the country was facing a hardest part of the Covid-19 pandemic.
In the accumulated result for the first ten months of this year, according to the Central Bank, spending by Brazilians abroad totaled US$ 10.05 billion. This represents an increase of 161% compared to the same period last year (US$ 3.84 billion).
BC numbers show that spending by Brazilians abroad has not yet returned to pre-pandemic levels, which started in March 2020.
Prior to Covid-19, spending was typically above $1.3 billion per month, and could top $2 billion in peak season months.
The expenses of Brazilians abroad are influenced by some factors, such as the level of economic activity and the price of the dollar, used in international transactions.
Tickets and hotel expenses, for example, are quoted in foreign currency. As a result, when the dollar is high, Brazilians end up spending more on these items.