Brazil's foreign direct investment beats estimates in February

BRASILIA, March 26 (Reuters) - Brazil's foreign direct investment (FDI) far exceeded expectations in February, central bank data showed on Wednesday, improving the country's 12-month inflows while its current account deficit worsened on the same metric.

FDI in Latin America's largest economy totaled $9.3 billion, well above the $5.5 billion forecast by economists polled by Reuters.

As a result, foreign investment in Brazilian companies where overseas investors hold at least a 10% voting stake rose to 3.38% of gross domestic product (GDP) over 12 months, up from 3.18% in the prior month.

Since FDI consists of long-term investments in productive activities, it is widely regarded by markets as a higher-quality source of financing for the current account deficit, which has been growing larger in Brazil.

The shortfall stood at $8.758 billion in February, below the $9.104 billion deficit projected by economists.

But this was not enough to prevent the 12-month current account deficit from widening to 3.28% of GDP from 3.03% in January, reaching its highest level since May 2020.

The deepening current account deficit has been largely driven by a sharp drop in Brazil's trade surplus, as robust economic activity fuels import growth.

In February, exports fell slightly from a year earlier, while imports continued to rise, resulting in a $979 million trade deficit for the month, compared with a $4.387 billion surplus in the same month in 2024, central bank figures showed.