Brazil’s External Balances Worsen Despite Strong Export Performance

Brazil’s Central Bank reported a current account deficit of $2.25 billion in March 2025. This figure comes after a volatile start to the year, with February’s deficit reaching $8.76 billion.

The March result reflects a rebound in Brazil’s trade surplus, which rose 13.8% year-on-year to $8.15 billion. Exports grew 5.5% to $29.18 billion, driven by a 10.1% jump in manufactured goods and a 16% surge in agricultural shipments.

Imports increased 2.6%, led by manufacturing and agricultural goods. Despite the strong trade surplus, Brazil’s external accounts show underlying weaknesses.

The services deficit widened, and foreign direct investment (FDI) dropped to $5.99 billion in March, its lowest in three months and well below February’s $9.3 billion.

Over the first quarter, FDI inflows failed to fully offset the current account gap, highlighting a shift from previous years when foreign capital consistently covered external shortfalls.

Official projections for 2025 expect the current account deficit to reach $62 billion, or 2.8% of GDP. This outlook factors in slower export growth, rising imports of capital and intermediate goods, and a larger services deficit.

The Central Bank anticipates FDI inflows of $70 billion, but notes increased risks from global trade tensions and softer commodity prices. Brazil’s foreign reserves remain robust, offering a buffer against external shocks.

However, the narrowing margin between FDI and the current account deficit signals a more fragile external position. Business leaders and investors now face a landscape where Brazil’s trade strength must balance against persistent service and income outflows.

The country’s ability to sustain capital inflows will shape its economic stability through 2025.

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