Economic Information

PRESS RELEASE - August 23, 2016

Foreign Sector
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I - Balance of payments - July 2016

In June, the current account posted a deficit of US$4.1 billion, accumulating a negative balance of US$27.9 billion, corresponding to 1.57% of GDP. In the financial account, net inflows exceeded net outflows by US$3.6 billion, highlighting net inflows of US$3.4 billion under the modality of portfolio investment - liability.

The service account registered net expenditures of US$2.3 billion in the month, a decline of 30.4% as compared with the result from July 2015, due to respective reductions under revenues and gross expenditures of 4.2% and 18.0%. Net expenditures on transportation services and equipment rental dropped by 46.2% and 13.8%, respectively, compared with the same month of the previous year. The international travel account recorded net expenditures of US$895 million, falling by 25.9% in the same basis of comparison, consequent upon relative stability under revenues from foreign travelers' expenditures in Brazil and a decline of 18.8% under Brazilian tourists' expenditures abroad.

Primary income net expenditures totaled US$6.3 billion in July 2016, rising by 20.3% when compared with the same period of the previous year. Net expenditures on profits and dividends reached US$1.6 billion, resulting from a decrease of 24.0% under revenues and an increase of 75.1% under expenditures. Net expenditures on interests totaled US$4.7 billion, compared with US$4.6 billion in the corresponding month of the previous year. Net outflows related to income on direct investments totaled US$1.9 billion, compared with net outflows of US$671 million observed in same month of the previous year. Net expenditures regarding income on portfolio investments totaled US$4.2 billion, comprising net expenditures on profits and dividends, US$223 million, interests on securities negotiated on the foreign market, US$1.1 billion, and interests on securities negotiated on the domestic market, US$2.8 billion. Net expenditures regarding income on other investments reached US$474 million, increasing by 10.2% compared with the same month of the previous year, whereas income related to earnings from the international reserves portfolio grew by 21.3% in the same period.

The secondary income account posted net inflows of US$226 million in July 2016. Net revenues related to personal transfers reached US$83 million in the month, dropping by 27.4% compared with the corresponding period of the previous year.

Direct investments abroad grew by US$178 million in the month, concentrated in equity capital and including reinvestment of earnings, compared with investments abroad of US$1.5 billion in the same month of the previous year.

Direct investments in the country totaled net inflows of US$78 million, resulting from net outflows of US$2.0 billion in equity capital, including inflows of US$758 million from reinvested earnings, and US$2.1 billion in credits received from abroad through intercompany transactions. Over twelve months, net inflows of direct investments into Brazil totaled US$72.0 billion, equivalent to 4.06% of GDP.

Portfolio investment - liabilities posted net inflows of US$3.4 billion in July, comprising net revenues of US$2.3 billion in stocks, US$611 million in investment funds and US$756 million in fixed-income securities traded on foreign markets, including the issuance of US$1.5 billion from the Global 47 by the Republic. Net outflows in fixed-income securities traded on the domestic market totaled US$328 million.

Other investment - assets rose by US$3.9 billion, comprising a decline of US$9.0 billion in deposits held by Brazilian banks abroad, a growth of US$4.1 billion in trade credits and advances, and an increase of US$1.0 billion in deposits held by nonfinancial companies.

Other investment - liabilities posted net inflows of US$1.6 billion. Trade credits and advances grew by US$2.8 billion, mainly in short-term transactions. In the month, net amortizations of long- and short-term loans reached US$1.0 billion and US$31 million, respectively.

II - International reserves

In July, the stock of international reserves according to the liquidity concept totaled US$377.5 billion, increasing by US$809 million compared with the previous month. The stock of repurchase lines reached US$8.2 billion in July, decreasing by US$4.4 billion compared with the position in June 2016. Income regarding earnings on reserves totaled US$257 million. The stock of reserves fell by US$119 million due to variations in the prices of assets that compose the portfolio, and increased by US$487 million due to parity variations. In the cash concept, the stock of reserves reached US$369.3 billion in June, increasing of US$5.2 billion as compared with the previous month.

III - External debt

The estimated gross external debt for July 2016 totaled US$338.1 billion, increasing by US$3.4 billion compared to the amount estimated for March 2016. The estimated long-term foreign debt reached US$274.1 billion, increasing by US$815 million, whereas the short-term debt totaled US$64 billion, increasing by US$2.6 billion in the same comparison basis.

Among the factors underlying the long-term external debt variation over the period, it should be highlighted the amortization of loans and debt securities by the financial sector, US$3.6 billion; the increase in the price of the Republic bonds, US$2.9 billion, and parity variations, which increased the debt stock by US$885 million. The increase in the stock of short-term foreign debt is mainly explained by amortizations of loans by the financial sector, US$2.5 billion.