January 27, 2020 / 1:29 PM / 5 months ago

UPDATE 1-Brazil 2019 current account deficit 2.76% of GDP, widest in four years

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By Jamie McGeever

BRASILIA, Jan 27 (Reuters) - Brazil’s balance of payments position with the rest of the world deteriorated last year, as a steep decline in the country’s trade surplus contributed to the widest current account deficit in four years.

December’s $5.69 billion current account deficit brought the total shortfall for the year to $50.76 billion, or 2.76% of gross domestic product, central bank figures showed on Monday. That was the widest gap by both measures since 2015 when Brazil was mired in one of its worst-ever recessions.

The 2019 figures compare with a deficit of $41.5 billion, or 2.20% of GDP, the year before. Central bank figures show the trade surplus last year shrank by more than a quarter to $39.4 billion from $53.0 billion in 2018.

Brazil’s exports last year were hit by the fallout from the Brumadinho mining disaster, escalating global trade tensions, and the financial and economic turmoil that rocked neighbor and key trading partner Argentina.

The current account deficit last year was more than adequately financed, however, by foreign direct investment of $78.56 billion, representing 4.27% of GDP. That was slightly up from $78.16 billion, or 4.15% of GDP, in 2018, the central bank said.

The data also shone a light on the central bank’s foreign exchange market interventions in the second half of last year as the real slid to new all-time lows against the dollar.

Total FX reserves fell by a net $17.8 billion over the course of the year to $356.88 billion, driven by spot FX market dollar sales of $36.9 billion, the central bank said. (Reporting by Marcela Ayres and Jamie McGeever; Editing by Catherine Evans)

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