Tumbling Brazilian Economy Sees One Silver Lining Amid Pandemic

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

Simultaneously grappling with surging deaths from Covid-19, recession and a weak currency, Brazil at least won’t have problem finding dollars to pay for imports and service its foreign debt in the aftermath of the pandemic.

As Brazilians stop traveling and spending money abroad, the country’s long-running current account deficit is narrowing fast and could even become a surplus this year. In April alone, it was a positive $3.8 billion, the highest ever according to data compiled by Bloomberg.

The data sets Latin America’s largest economy apart from many of its neighbors which are either restructuring foreign debt or relying on the International Monetary Fund for protection. So far this year, the Fund has renewed or extended flexible credit lines — which work as a precautionary measure in moments of stress — to Mexico, Chile, Colombia and Peru.

“Next year, many emerging countries could face crises of payments,” said Armando Castelar, an economist at Fundacao Getulio Vargas in Rio de Janeiro who headed the economics department at Brazil’s BNDES development bank. “If the current account deficit continues to decrease, or even zeroes, Brazil will at least be saved from that.”

Staying Home

That may not seem like much of a bright spot when the economy is expected to contract well over 6% this year, and much of the improvement in the current account comes from sharp drops in imports and international travel.

Last month, as Brazil became a hotspot for the coronavirus, President Donald Trump restricted entry of most non U.S. citizens coming from the Latin American country. But the pandemic and a sinking currency had already grounded many Brazilians: Net travel expenses stood at $1.6 billion in April, less than half of what it was in the same period in 2019.

Central bank President Roberto Campos Neto last week attributed a recent rebound in the real, which still remains the world’s worst-performing major currency, partly to the current account improvement. Before the coronavirus hit, the bank expected a $41 billion deficit this year, but will review that forecast on June 25, in their quarterly inflation report.

This article was originally posted on finance.yahoo.com/news/.
Home of Science
Follow me

Latest posts by Home of Science (see all)
- Advertisement -

Discover

Sponsor

Latest

Discovering Your Interests Through Science Fairs

We all love science, in fact most of us have learned to love it. In some ways it seems the harder a task is...

Do Business Plan Templates Make Sense For Your Business?

Is a business plan template the right tool for your business? Well, it really depends on your situation. It may not be the best...

ANALYSIS-Airbus’s landmark jet output cut faces crucial test

PARIS, April 9 (Reuters) - Airbus's AIR.PA decision to cut output of its best-selling jet by a third amid coronavirus marks a huge shift for the European planemaker,...

Apple to reopen stores in US starting next week

KEY POINTS Apple will reopen stores in Idaho, South Carolina, Alabama and Alaska starting next week. The stores will have temperature checks and will only...

The Truth About Success

There are many ways to explain the difference between them, but one must admit that many books written by Priyank Chopra have nothing but...
Home of Science
Follow me
Latest posts by Home of Science (see all)