Brazilian current account balance likely improved in July, albeit at slower pace

In 2015, Brazil’s current account balance rebounded to –USD 58.9 billion from 2014’s deficit of USD 104.2 billion. As a percentage of the GDP, current account deficit in Brazil improved to 3.1 percent in 2015 from 4.3 percent of GDP. The current account continued to recover at a sharp rate early in 2016.

However, as exports slowed in the past few months, partially because of the real strengthening, the gains to trade and current account balance would be quite smaller in the second half of 2016, said Societe Generale in a research report.

Given July’s trade balance of USD 4,579 million, a year-on-year improvement of USD 2,193 million, the current account deficit in July is expected to have come in at USD 2, 459 million, a year-on-year improvement of USD 3,225 million, stated Societe Generale.

“On our forecast, therefore, the year-to-date current account balance should improve to -USD10.9bn from -USD43.6bn for the same period in 2015. Looking ahead, the current account balance projection for the full year could fall short of our current expectation of -1.7 percent of GDP”, added Societe Generale.