Brazil current account deficit ends 2025 steady, covered by FDI

By Marcela Ayres

BRASILIA, Jan 26 (Reuters) - Brazil's current account deficit ended 2025 broadly in line with the previous year, reversing a deterioration seen earlier in the year and remaining largely covered by foreign direct investment, central bank data showed on Monday.

Latin America's largest economy closed last year with a current account deficit of 3.02% of gross domestic product (GDP), compared with 3.03% in 2024.

Earlier in the year, the deficit had widened to nearly 3.7% of GDP on a 12-month rolling basis, mainly reflecting a smaller trade surplus as imports grew faster than exports amid resilient domestic demand.

In the final months of the year, however, clearer signs of economic cooling emerged as the central bank maintained an aggressive monetary stance, keeping interest rates at a nearly 20-year high of 15% in an effort to bring inflation back to its 3% target.

Policymakers are scheduled to meet again on Tuesday and Wednesday, and markets broadly expect rates to remain unchanged for a fifth consecutive meeting.

Foreign direct investment (FDI) in Brazil ended the year at 3.41% of GDP, also close to the 3.39% of GDP recorded in 2024.

In December, the current account registered a deficit of $3.4 billion, narrower than economists' expectations in a Reuters poll for a $5.3 billion shortfall, largely due to a strong trade surplus of $8.8 billion, more than double the level seen a year earlier.

FDI, however, posted a net outflow of $5.2 billion in December, versus expectations in the poll for a $1 billion inflow.

According to the central bank, the figure was driven mainly by net outflows of $11.4 billion in reinvested earnings, indicating that profit remittances exceeded profits earned in the month.

Starting in January this year, the Brazilian government began levying a 10% withholding tax on all profit remittances sent abroad.