Last year, Brazil’s current account balance rebounded to a deficit of USD 58.9 billion from 2014’s deficit of 104.2 billion. In 2016, Brazil’s current account balance continued to recover at a sharper rate. In the first quarter, Brazil recorded a current account deficit of USD 7.6 billion, as compared with the deficit of USD 25.1 billion in Q1 2015. Trade surplus increased due to declining imports and recent stabilization of exports. Trade balance is expected to have continued with this trend into the second quarter of 2016, said Societe Generale in a research report. Brazil’s current account balance is expected to have reached a deficit of USD 1072 million in April, added Societe Generale.
Given the recent recovery in commodity prices and persistent weakness in domestic demand, this trend is expected to further bolster in the coming few months. Brazil’s current account deficit is likely to narrow to 2.2% of the GDP in 2016, according to Societe Generale. Even if the global growth continues to be subdued, it continues to surpass the Brazilian economy. Hence there is a major possibility that a slight rebound in the current account balance will continue in the forecast horizon. But if the Brazilian economy rebounds more rapidly than expected, imports will increase rapidly resulting in current account to deteriorate slightly in the medium to long term, noted Societe Generale.