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Trade
balance closes the year in a deficit. In December, the
trade balance registered a US$ 213 million deficit, the fourth consecutive
monthly deficit. As a result, the 2000 trade deficit reached US$ 365
million. Export growth remained healthy through the end of the year
with total exports reaching US$ 54.4 billion, up 13.3%. The economic
recovery and high oil prices also substantially hiked imports to US$ 54.7
billion, up 11.3% from 1999. Export growth is expected to remain
strong this year with growth estimated at 11.0%. However, stronger
recovery in economic activity is also expected to continue to drive up
imports, which are expected to grow by 9.0% this year. As a result,
panellists have revised downward their trade balance projections for this
year in this month’s Consensus Forecast.
This
year’s deterioration in the trade balance is reflected in balance of
payments figures, which indicate that the annual current account deficit
reached US$ 24.7 billion in November, down slightly from US$ 25.5 billion
in November 1999.
Panellists expect the current account deficit to have widened
further in December.
Furthermore, panellists expect the current account to deteriorate
this year from the 2000 level.
The possible growth constraint that the current account deficit
could pose this year will be determined largely by whether foreign direct
investment inflows continue to help finance the shortfall.
Foreign
direct investment remains strong in 2000. Foreign direct
investment flows reached US$ 28.3 billion by the end of November, more
than sufficient to cover the current account shortfall. According to
the Central Bank, foreign direct investment was targeted principally in
the services sector, particularly finance and telecommunications, which
together provided for 46.3% of total foreign direct inflows.
Industry attracted an additional 23.7% of foreign direct investment,
principally the pharmaceuticals and chemicals sectors. By the end of
November, Spanish foreign direct investment accounted for 22.3% of the
total inflows followed by the United States with 21.7%.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Brazil. For more details please click here.
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