Brazil's current account deficit deteriorates more-than-expected in January

Corrects headline and paragraph 1 to larger, not narrower than expected deficit

BRASILIA, Feb 27 (Reuters) - Brazil's current account deficit in January came in slightly larger than expected, marking a sharp deterioration from the same month last year amid a shrinking trade surplus, central bank data showed on Thursday.

Latin America's largest economy posted a current account deficit of $8.7 billion in the first month of the year, nearly double the $4.4 billion shortfall reported in January 2024.

Economists polled by Reuters had expected a deficit of $8.3 billion.

Foreign direct investment (FDI) for the month totaled $6.5 billion, broadly in line with the $6.55 billion projected by economists.

Over the 12-month period, the current account deficit rose to 3.02% of gross domestic product, the worst level since June 2020, though still covered by FDI, which stood at 3.16% of GDP.

The monthly deficit was driven by a steep decline in the trade surplus, which fell to $1.2 billion, a 78% drop from January last year.

This was due to rising imports, reflecting an economy that remains resilient despite an aggressive monetary tightening cycle aimed at curbing inflation, coupled with a decline in exports.

Central bank data showed the services account deficit widened $1 billion to $4.6 billion, while the deficit in the factor payments account narrowed $1.1 billion to $5.6 billion.