Brazil closed 2024 with a current account deficit equivalent to 2.55% of GDP, more than double the 1.2% recorded in 2023, according to data from the central bank. The widening deficit was driven by a shrinking trade surplus and a growing services account deficit, reflecting robust economic activity throughout the year.
The trade surplus dropped by 28.2% to $66.2 billion, with exports declining by 1.2% and imports increasing by 8.8%. This reversal stemmed from the stronger-than-expected performance of Latin America’s largest economy, which spurred demand for imported goods. Despite the slowdown in exports, Brazil’s economy consistently exceeded growth expectations in 2024.
Meanwhile, the services account deficit widened by 24.7% to $49.7 billion, reflecting higher expenditures on sectors such as travel, transportation, and professional services. However, the factor payments deficit narrowed by 5.1% due to reduced profit and dividend outflows, slightly offsetting the overall current account deterioration.
December saw a particularly sharp current account deficit of $9 billion, while foreign direct investment (FDI) for the month reached $2.8 billion. For the year, FDI climbed to $71.1 billion, equivalent to 3.24% of GDP, up 13.8% from 2023. This increase underscored sustained investor interest in Brazil, even amid heightened fiscal concerns.
Portfolio investments, however, reflected net outflows of $4.3 billion in 2024. Equities and investment funds experienced outflows of $17.1 billion, partially mitigated by $12.8 billion in net inflows to debt securities. In December alone, portfolio outflows hit $12.6 billion, the second-worst monthly result since 1995, driven by a sharp rise in the risk premium after a fiscal package unveiled by the government failed to assuage concerns over rising public debt.
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