Brazil’s current account deficit was wider than analysts expected last month, as a trade surplus wasn’t large enough to offset a deficit in international travel and machinery rental.
The deficit in the current account, the broadest measure of trade in goods and services, narrowed in March to $5.7 billion from a revised $7.1 billion a month earlier, the central bank said in a report distributed Wednesday in Brasilia. The median estimate from 18 economists surveyed by Bloomberg was for a gap of $4.9 billion. The bank used new methodology in the balance of payments report.
President Dilma Rousseff’s government is struggling to sell its fiscal-austerity measures to Congress as it strives to stave off a credit-rating downgrade and boost investor confidence. Economists surveyed weekly by the central bank forecast the measures will lead a contraction in gross domestic product before the economy bounces back in 2016.
Swap rates on the contract due in January 2017, the most traded in Sao Paulo on Wednesday, fell one basis point, or 0.01 percentage point, to 13.32 percent at 10:55 a.m. local time. The real was little changed at 3.0311 per U.S. dollar and has dropped 12 this year.
Foreign direct investment in March rose to $4.3 billion from February’s revised $3.1 billion with the new methodology. The median estimate from 14 economists surveyed by Bloomberg was for FDI of $3.6 billion.
Brazil in March posted a trade surplus of $230 million, while showing a $2.7 billion deficit in machinery rental and a $1 billion gap in international travel.
Latin America’s largest economy will shrink 1 percent this year after expanding just 0.1 percent in 2014, according to analysts surveyed weekly by the central bank. The contraction, the worst in a quarter century, will be followed by 1 percent growth in 2016, according to the survey.
Brazil’s economic slowdown hasn’t contained inflation, which accelerated to 8.22 percent in the year through mid-April from 7.9 percent the prior month. The central bank targets consumer price increases of 4.5 percent, plus or minus two percentage points.
Policy makers have raised the benchmark interest rate in four straight meetings in a bid to tame inflation.