The Current Account Deficit Has Climbed above 4% of GDP

BRAZIL ECONOMICS - Report 22 Dec 2014 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

The current transactions account showed a deficit of US$ 9.3 billion in November, bringing the total deficit over the preceding 12 months to US$ 88.7 billion, or 4.1% of GDP, the largest proportional deficit since January 2002 (Graph 1). This large negative result reflects the current capital flow pattern, requiring an adjustment in the current account deficit. The external scenario does not seems to be in favor of this adjustment, and depreciation of the real exchange rate should be an important part of the necessary reduction of the current account deficit.

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