Business

Brazil’s current account deficit: reason for concern?

Events in China and Argentina led to a growth in the deficit of Brazil's balance of payments. Should we be worried?

Brazil Central Bank building deficit
Brazil’s Central Bank building. Photo: Diego Grandi/Shutterstock

Rocked by the economic crisis in Argentina and the swine flu outbreak in China, Brazil’s trade surplus hit USD 46.7 billion in 2019, below 2018’s USD 58.03 billion. That led Brazil to finish the year with a current account deficit of BRL 50.7 billion, or 2.76 percent of Brazil’s GDP, the biggest since 2015. But, is this important? And if so, why?

The current account deficit is a component of what economists call a country’s balance of payments, or BOP.

This is the resulting influx of wealth between a given country and foreign nations. It comprises current...

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