Brazil March Current Account Deficit Smallest in Over Six Years

Brazil’s current account gap in March was the narrowest since August 2009 as a prolonged recession curbed imports.

The deficit in the current account, the broadest measure of trade in goods and services, narrowed last month to $855 million from $1.9 billion in February, the central bank said Wednesday. Economists surveyed by Bloomberg forecast a gap of $1.2 billion. Foreign investment in Brazil during the month fell to $5.6 billion from $5.9 billion.

Brazilian imports remained at six-year lows in March as the worst political crisis in decades weigh on consumer and business confidence, sinking Latin America’s largest economy in its worst recession in over a century. Impeachment proceedings against President Dilma Rousseff, approved by the lower house of Congress on Sunday, have increased political uncertainty and delayed an economic recovery.

A recent appreciation of the Brazilian currency hasn’t had a meaningful impact on foreign trade as exports rose in March for a second consecutive month. The real has gained the most this year among 16 major currencies tracked by Bloomberg on prospects that the more market-friendly Vice President Michel Temer will take over if Rousseff is ousted.

This year’s gains were still insufficient to make up for a 33 percent devaluation of the real in 2015, which made Brazilian assets more appealing to foreign investors, according to Tulio Maciel, head of the central bank’s economic research department.

“Foreign investments remained at a high level despite uncertainties,” Maciel told reporters in Brasilia, adding that the central bank’s $60 billion forecast for the year could be seen as conservative.

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