External accounts have a negative balance of US$ 1.7 billion in April

External accounts had a negative balance of US$ 1.680 billion in April, informed the Central Bank (BC) this Friday (26). In the same month of 2022, there was a surplus of US$ 100 million in current transactions, which are purchases and sales of goods and services and income transfers with other countries.

The difference in the interannual comparison is mainly the result of the deterioration in primary income (payments of interest and corporate profits and dividends), which increased by US$ 1.6 billion. The secondary income account, which are transfers without counterparts, decreased by US$ 361 million. On the other hand, there was a slight increase in the trade surplus, of US$ 118 million, and stability in the services account.

In 12 months, ending in April, the deficit in current transactions is US$ 54.208 billion, 2.76% of the Gross Domestic Product (GDP, sum of goods and services produced in the country), compared to a negative balance of US$ 52.428 billion (2.67% of GDP) in March 2023 and a deficit of US$44.591 billion (2.56% of GDP) in the equivalent period ending in April 2022.

In the accumulated result for the year, the deficit is US$ 13.678 billion, against a negative balance of US$ 16.468 billion from January to April 2022.

Trade balance and services

Goods exports totaled US$ 27.575 billion in April, a reduction of 5.7% compared to the same month of 2022. Imports totaled US$ 20.633 billion, a decrease of 8% compared to April last year. With these results, the trade balance closed with a surplus of US$ 6.942 billion last month, compared to a positive balance of US$ 6.824 billion in April 2022.

The deficit in the services account (international travel, transport, equipment rental and insurance, among others) totaled US$ 3.159 billion in April, practically stable at US$ 3.198 billion in the same month of 2022.

In the case of international travel, following the trend of recent months, revenues from foreigners traveling to Brazil grew in the interannual comparison and reached US$ 452 million in April, against US$ 394 million in the same month of 2022. Expenses by Brazilians abroad went from US$ 1.098 billion in April last year to US$ 1.235 billion in the same month of 2023.

As a result, the travel account ended the month with an 11.4% increase in the deficit, reaching US$ 784 million, compared to a deficit of US$ 703 million in April 2022, contributing to increase the negative balance in services. According to the BC, this is an account greatly affected by the restrictions imposed by the covid-19 pandemic, and despite the gradual recovery, the values ​​are still far below the pre-pandemic period. Compared to April 2019, April 2023 results are 17% lower.

On the other hand, the transport item contributed to the reduction of the service account deficit, from US$ 1.372 billion in April 2022 to US$ 1.013 billion last month, a decrease of 26.1%. According to the head of the Statistics Department at the Central Bank, Fernando Rocha, the improvement was influenced by lower expenses with freight, which had a reduction due to the drop in international prices, in addition to a reduction in imports.

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In April, the deficit in primary income (profits and dividends, interest payments and wages) reached US$ 5.370 billion, an increase of 41.5% compared to US$ 3.794 billion in the same month of 2022. Normally, this account is in deficit , since there are more investments by foreigners in Brazil, who send profits abroad, than by Brazilians abroad, according to Rocha.

In the case of profits and dividends associated with direct and portfolio investments, there was a deficit of US$ 3.848 billion in April this year, compared to that observed in April 2022, of US$ 3.012 billion, due to the reduction in revenues.

Net interest expenses also increased and went from US$ 801 million in April 2022 to US$ 1.538 billion last month.

The secondary income account (generated in one economy and distributed to another, such as donations and remittances of dollars, without counterpart services or goods) had a negative result of US$ 93 million, against a surplus of US$ 268 million in April 2022.

Investments

Net inflows in direct investments in the country (IDP) totaled just US$ 3.312 billion last month, compared to US$ 11.084 billion in April 2022.

According to Fernando Rocha, intercompany operations (such as loans from the headquarters abroad to the branch in Brazil) were responsible for the drop, since in April 2022 there were inflows and last month, payments.

He explained that there is no specific factor for this reversal and that these remittances and amortizations occur according to a maturity schedule, “which was more loaded in April 2023”. Another possibility is that in April 2022 there were more significant disbursements, impacting the basis for comparison.

Last month, there were net inflows in capital participation of US$ 4.414 billion, such as with the purchase of new companies and reinvestments of profits, against US$ 6.444 billion in April 2022. Meanwhile, intercompany operations had a deficit of US$ 1.102 billion in April 2023, against a surplus of US$ 4.639 billion in the same month of 2022.

When the country registers a negative current account balance, it needs to cover the deficit with investments or loans abroad. The best form of financing the negative balance is the IDP, because the resources are invested in the productive sector and tend to be long-term investments.

For the month of May, the Central Bank partial for the IDP, until the 23rd, is of net inflows of US$ 5.844 billion. “So, for May, the partial and preliminary data indicate that these results are going to improve significantly. This allows us to say that the April data was due to a specific reduction in flows and not a trend reversal,” Rocha said.

In the 12 months ended in April, the IDP grew significantly in the interannual comparison and totaled US$ 81.958 billion, corresponding to 4.17% of GDP. In the previous month, March 2023, these inflows were US$89.730 billion (4.57% of GDP) and US$54.314 billion (3.12% of GDP) in April 2022.

In the case of portfolio investments, in stocks and fixed income securities, they went from outflows of US$ 3.835 billion in April 2023 to inflows of US$ 3.262 billion last month. “There is an improvement in these financing conditions, practically in the same magnitude as the drop in the IDP, showing the diversification of financing sources for the Brazilian economy”, explained Rocha.

In total, portfolio investments in the domestic market totaled net inflows of US$1.090 billion in April 2023, made up of inflows of US$1.514 billion in stocks and investment funds and outflows of US$424 million in debt securities.

The stock of international reserves reached US$ 345.725 billion in April, an increase of US$ 4.567 billion compared to the previous month. The result was mainly due to the net return of US$ 2.5 billion in operations with repurchase lines. Additionally, positive contributions from changes in prices and parities added up to US$ 1.147 billion and interest income added up to US$ 613 million.