(Adds central bank’s new 2015 estimates and methodology details)
BRASILIA, April 22 (Reuters) - Brazil’s current account deficit narrowed in March from a year earlier, according to central bank data released on Wednesday under a new methodology that bolstered international direct investment figures to nearly cover the external gap.
The commodities powerhouse posted a current account gap of $5.736 billion in March, down from a deficit of$6.602 billion in March of 2014.
The market expected an external gap of $5 billion for March, but changes to the bank’s methodology made it difficult to compare the figures.
The central bank adopted the International Monetary Fund’s sixth balance of payments manual, which added some inflow items to the calculations of the current account and foreign direct investment.
The bank revised up its 2014 current account gap to $103.981 billion from a deficit of $90.948 billion previously. Under the new methodology the bank now sees reinvested profits and debt payments to foreigners as expenditures, increasing the current account gap.
In standard economic terms,the balance of payments’ current account is a broad measure of a country’s external transactions, including trade, services like tourism and insurance, profit remittances and interest payments.
The bank substituted its previous foreign direct investment item with the new direct investment in the country, which had a hefty upward revision to $96.8 billion in all of 2014 from the previous $62.5 billion.
Under the new methodology direct investment covered 93 percent of the current account gap in 2014, up from 68 percent with the previous figures. The new methodology now adds the repatriation of loans by foreign subsidiaries to the direct investment item.
The central bank revised its 2015 estimates for both the country’s current account gap and direct investment to $84 billion and $80 billion respectively.
In the 12 months through March, the current account deficit was equivalent to 4.54 percent of Brazil’s gross domestic product. (Reporting by Alonso Soto and Marcela Ayres; Editing by Chizu Nomiyama and W Simon)