Brazil’s Current Account Gap Widens More Than Forecast in July

(Bloomberg) -- Brazil’s current account deficit widened more than economists forecast in July as recent currency gains weighed on the country’s trade balance.

The gap in the current account, the broadest measure of trade in goods and services, widened to $4.1 billion from $2.5 billion in June, the central bank said Tuesday. Economists surveyed by Bloomberg forecast a deficit of $3.8 billion. 

Foreign direct investment in July fell to an all-time low of 78 million due to an unspecified, one-time financial operation, the central bank said, forecasting FDI will rise to $7 billion in August.

Brazil’s current account had been recovering since late 2014 as a weaker currency boosted exports while a prolonged recession limited imports. That pace of adjustment was expected to moderate eventually, said Tulio Maciel, head of the central bank’s economic research department.

“Changes in the currency confirm that expectation,” Maciel told journalists in Brasilia. “Nearly two-thirds of the current account adjustment is a result of the trade balance performance.”