Central Bank: Brazilian Expenses Abroad Amount to US$1.3 Billion in September

RIO DE JANEIRO, BRAZIL – This was the highest figure for the month since September 2017, when it stood at US$1.716 billion. In September 2018, spending totaled US$1.189 billion. The data were released yesterday, October 24th, in Brasília, by the Central Bank (BC).

According to the head of the Central Bank’s Statistics Department, Fernando Rocha, September’s result interrupts a downward path in travel spending recorded in previous months. “But this does not necessarily point to a trend,” he said.

This month, up until the 22nd, spending reached US$1.038 billion. Rocha stressed that in nine months of the year, these travel expenses totaled US$13.344 billion, less than the US$13.875 billion in the same period in 2018.

Revenues from foreigners traveling to Brazil totaled US$391 million last month and US$4.529 billion in nine months, against US$373 million and US$4.513 billion, respectively, in the same periods in 2018.

As a result, the travel account, made up of expenses and revenues, closed out September at a negative US$ 938 million and in the nine months of the year with a deficit of US$8.814 billion.

Foreign Accounts

International travel is part of the current transaction services account, which are purchases and sales of goods and services and income transfers from Brazil to other countries.

In September, current transactions showed a US$3.487 billion deficit and an accumulated US$34.055 billion in the first nine months of the year, against US$194 million and US$18.566 billion, respectively, over the same periods in 2018.

According to Rocha, the increase of US$3.3 billion in the current account deficit in September this year, against the same month in 2018, is explained by the lower trade surplus, which is also part of the current transactions.

He explained that during this period, the trade surplus was reduced by US$3 billion. “The remainder [of the increase in the deficit] is explained by services and primary income,” he said.

In October, the Central Bank expects the current account deficit to continue to increase, also because of the lower trade surplus. The Central Bank’s expected negative result is US$5.8 billion, compared to the US$540 million deficit in October 2018.

The Central Bank also projects that foreign direct investment in Brazil should reach US$7.2 billion. Up to October 22nd, these investments totaled US$5.727 billion.

Rocha also said that the approval of the Welfare reform and the Transfer of Rights auction are favorable to the inflow of foreign investments into the country. According to him, the reform brings the country “closer to the moment when the public debt will stabilize,” as a result of slower growth in government spending on social welfare.

“The Welfare reform is perceived as a change in the country’s fiscal trajectory expected for the coming years. As a result, the fiscal situation will be more under control, which is favorable for foreign investments,” he explained.

“In the case of the transfer of rights, we expect significant foreign investment inflows,” he said.

Source: Agência Brasil

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