Itaú BBA - Current account deficit below expectations in November, with surprise in the services account

Macro Brazil

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Current account deficit below expectations in November, with surprise in the services account

diciembre 20, 2019

The main surprise came from the equipment rental account, which is typically volatile. At the margin, the current account deficit is narrower.


For the version with all charts and tables, please open the attached pdf file
 

 The current account posted a $2.2 billion deficit in November, below our estimate ($3.4 deficit) and market consensus ($3.8 billion deficit). The main surprise came from the equipment rental account, which is typically volatile. Accumulated over 12 months, the current account deficit receded to $51.2 billion or 2.8% of GDP (from $52.1 billion in October).

 From January to November, however, the current account deficit increased to $45 billion, from $35 billion in the same period of last year. The widening in the current account deficit is due to the weakening in the trade balance, particularly the decline in exports. 

 For the coming years, we forecast current account deficits around 2.5%-3.0% of GDP, in line with the economic recovery. Despite the higher level, the current account deficit will likely continue to be comfortably financed by foreign direct investment. 
 

Julia Gottlieb
Thales Caramella


For the version with all charts and tables, please open the attached pdf file



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