Brazil's Foreign Direct Investment Through October Surpasses 2024 Total

• Brazil's foreign direct investment (FDI) inflows through October have already surpassed last year's total, central bank data showed on Tuesday, as the government expects FDI to reach a record high this year.
• The improvement in FDI, considered a higher-quality form of financing because it reflects long-term investment in productive activity, should help offset a worsening current account balance in Latin America's largest economy.
• Year-to-date FDI reached US$74.26Bn after a higher-than-expected inflow in October, the central bank said, up 8.8% from a year earlier and above the US$74.09Bn recorded in all of 2024. The country drew US$10.94Bn in foreign direct investments last month, while economists polled by Reuters expected US$6.30Bn.
• Vice President Geraldo Alckmin said on Monday that Brazil was on track to set an FDI record this year. The country's highest annual inflow so far was in 2011, at US$102.43Bn.
• On the other hand, Brazil posted a US$5.12Bn current account deficit in October, wider than the US$4.8Bn expected in the Reuters poll. The year-to-date shortfall hit US$62.07Bn, a 20.5% year-on-year increase.
• The deteriorating scenario stems mainly from a weaker trade surplus, as imports have grown faster than exports amid resilient economic activity despite restrictive interest rates aimed at taming inflation.
• Over the 12 months through October, the current account deficit stood at 3.48% of gross domestic product (GDP) but was fully covered by FDI at 3.63% of Gross Domestic Product (GDP) - something that had not been seen since January.

(Source: Reuters)