Increased current account deficit, experts, it is related to the fact that the Brazilian economy is overheated, growing above the potential
The volume of investments received by the last 12 months is below the level required to cover the current account deficit and this trend should continue by the end of the year, and may extend, given the uncertainty brought by import tariffs announced by and the impacts of this on the country’s targeted capital flow. The latest data on external accounts for June show that the 12 -month accumulated current account deficit reached US $ 73.135 billion, equivalent to 3.42% of gross domestic product (). In the same interval, direct investment in the country (IDP) added US $ 70.476 billion (3.14% of GDP).
The increase in the current account deficit, experts, according to experts, is related to the fact that the Brazilian economy is overheated, growing above potential. According to G5 Partners chief economist Luis Otávio Leal, the proportion of the deficit in relation to GDP is even “the pudding proof” to realize if the economy is expanding at too rapidly pace. “A deficient balance close to 4% of GDP in 12 months is not a balance of economy growing close to its potential. When it is close to potential, we see a growth of about 2% of GDP,” he details.
When the economy is heated, it is common for imports to gain traction in the trade balance of goods by domestic demand, says economic analyst Lucas Farina of brilliant investments. In addition, lace and services scales have also contributed to the worsening of the deficit in current transactions, according to economist Luíza Pinese, from XP Investimentos. “The service deficit continues to beating records, reflecting the purchase of new streaming services as well as other digital services,” he notes.
The negative result in a country’s checking account shows that it is spending more foreign currency to buy products and services from outside than it collects by selling to other countries. To cover this difference, foreign financing is required, which may come through IDP – the investment of companies or investors from other countries. In the case of Brazil, IDP was more than enough to cover the current account deficit for years. This trend, however, changed by 2025, in the face of uncertainty about the global economic scenario motivated mainly by fears with the import fares applied by the United States.
The country, says Farina, is primarily responsible for the entry of foreign investments in Brazil, responding for approximately a quarter of the total net entry of resources here. “If we have a extension of these commercial rusts between Brazil and the US, we can see a continuity in the reduction of IDP, which we have already observed month after month,” he says.
Risks for the economy
The deterioration in the IDP balance, failing to support the deficits in the checking account, requires change in two variables: the cooling of the activity or the devaluation of the exchange rate. “If we see the IDP sink even more, there will be a constant pressure on the exchange rate, which has bad impacts on inflation, due to pass-through“Says Farina, from the genius. For now, he projects the exchange rate at $ 5.67 and GDP growing 2.4% in 2025.
With the possible transfer of the exchange rate on the price of wholesale to retail, food inflation may increase ahead. “This worsening external accounts can have unpleasant effects, slowing, for example, the Selic cut cycle, which is today at 15%,” he says.
The genius estimates that the flow deficit in 2025 reaches $ 68 billion (3.08% of GDP), while foreign investment entry should add US $ 66 billion (2.98% of GDP). This scenario, says Farina, does not consider a climb of retaliation between the United States and Brazil.
*With information from Estadão Content