Economy January 26, 2026

Brazil's Current Account Deficit Holds Steady in 2025, Largely Buffered by FDI

Deficit ends year near prior level as foreign direct investment remains broadly stable despite December outflows

By Caleb Monroe
Brazil's Current Account Deficit Holds Steady in 2025, Largely Buffered by FDI

Brazil closed 2025 with a current account deficit equal to 3.02% of GDP, almost unchanged from 3.03% in 2024, central bank figures show. The gap narrowed from an earlier widening to nearly 3.7% of GDP and remained mostly financed by foreign direct investment, which totaled 3.41% of GDP for the year. December data showed a narrower-than-expected current account shortfall driven by a strong trade surplus, while FDI recorded a December net outflow influenced by reinvested earnings.

Key Points

  • Brazil ended 2025 with a current account deficit of 3.02% of GDP, nearly unchanged from 3.03% in 2024.
  • Foreign direct investment covered much of the deficit, finishing the year at 3.41% of GDP versus 3.39% in 2024; however, December saw an FDI net outflow of $5.2 billion.
  • December's current account deficit was $3.4 billion, narrower than the $5.3 billion expected, supported by a robust $8.8 billion trade surplus; monetary policy remained tight with interest rates at 15%.

Brazil's external finances finished 2025 with a current account deficit that was effectively unchanged from the prior year, according to central bank data released on Monday. The shortfall came in at 3.02% of gross domestic product (GDP), compared with 3.03% in 2024.

Earlier in 2025 the deficit had widened to almost 3.7% of GDP on a 12-month rolling basis. That deterioration was mainly linked to a smaller trade surplus as imports outpaced exports amid relatively resilient domestic demand.

In the latter part of the year, however, signs of an economic slowdown became more apparent. The central bank retained an aggressive monetary stance, keeping its policy interest rate at 15%, a level described by officials as a nearly 20-year high, as it sought to steer inflation back toward its 3% target. Policymakers are scheduled to meet again on Tuesday and Wednesday, and market participants broadly expect the bank to hold rates steady for a fifth consecutive meeting.

Foreign direct investment proved sufficient to largely cover the current account deficit over the full year. FDI totaled 3.41% of GDP in 2025, marginally above the 3.39% of GDP recorded in 2024.

Monthly flows in December painted a mixed picture. The current account registered a deficit of $3.4 billion for the month, narrower than the $5.3 billion shortfall economists polled by Reuters had expected. The smaller-than-anticipated deficit reflected a notably strong trade surplus of $8.8 billion in December, more than double the level recorded in the same month a year earlier.

At the same time, foreign direct investment showed a net outflow of $5.2 billion in December, in contrast to the $1 billion inflow expected in the Reuters poll. The central bank attributed this December FDI reversal primarily to net outflows of $11.4 billion in reinvested earnings, a sign that profit remittances exceeded the profits accrued during the month.

Policy changes at the start of the year may be relevant to these flows. Beginning in January, the government implemented a 10% withholding tax on profit remittances sent abroad, a measure that affects the returns investors send back to parent companies outside Brazil.

Overall, the central bank data depict a year in which Brazil's external deficit returned to a level close to that of 2024, with FDI continuing to play the primary role in covering the gap despite episodic monthly volatility.

Risks

  • Monetary policy uncertainty - Policymakers are meeting again and markets expect rates to remain unchanged; continued high rates could influence borrowing costs and domestic demand, affecting financial and consumer sectors.
  • Volatile FDI flows - The December net outflow in FDI driven by reinvested earnings suggests foreign investment can swing month to month, creating uncertainty for capital markets and corporate financing.
  • Profit repatriation and taxation - The newly implemented 10% withholding tax on profit remittances may affect future remittances and investor behavior, posing an uncertainty for multinational corporations and banking sector capital flows.

More from Economy

SNB Chair Calls Low Inflation and 0% Rates a Challenge for Policy Feb 2, 2026 Bostic: Warsh Confronts 'Tall Task' in Winning Fed Committee Support Feb 2, 2026 U.S.-India Trade Steps and Tariff Timeline After 50% Duty Imposed Feb 2, 2026 U.S. and India Reach Trade Agreement; U.S. Tariffs Cut to 18% Feb 2, 2026 House Prepares Vote to End Brief Partial Shutdown, Final Ballot Expected Tuesday Feb 2, 2026