(Adds anticipated World Cup impact on foreign accounts and
estimates for June, paragraph 13)
BRASILIA, June 24 Brazil's current account
deficit was the widest on record for the month of May as
Brazilians spent more on international travel and foreign
companies sent profits and dividends to their headquarters
Brazil had a current account deficit of $6.635
billion in May, above the previous record high of $6.356 billion
for that month posted last year, central bank data showed on
The country had been expected to post a deficit of $6.65
billion, according to the median forecast of 16 analysts in a
Reuters poll. Brazil's current account deficit in April was
Foreign direct investment, which falls in the
capital account of the balance of payments, was $5.963 billion
in May, above market expectations of $5.2 billion.
For 2014, the central bank Tuesday saw FDI of $63 billion,
which fell short of the current account deficit estimate of $80
If those forecasts materialize, it would mark the second
year in a row that FDI falls short of covering the current
For many years prior, FDI inflows were sufficient to finance
current account deficits in Brazil.
The current account is a country's widest measurement of
foreign exchange flows, including trade, services, interest
payments and remittances.
The central bank's head of research, Tulio Maciel, said he
expects the country's current account gap to shrink to $4.3
billion and FDI to fall to $3.6 billion in June.
The country's current account gap has widened sharply over
the last two years due to a dwindling trade surplus that had its
weakest result in a decade in 2013.
For 2014, the central bank on Tuesday cut its trade surplus
estimate to $5 billion from $8 billion.
Weighing on trade accounts are steadily rising gasoline
imports while the global prices of some of its key exports like
soy and iron ore fell.
Lavish spending by Brazilians traveling abroad have also
contributed to the external account gap and weighed on the local
currency, Brazil's real. Brazilians traveling abroad
spent a net $1.735 billion in May, up from $1.699 billion last
For June that deficit in international travel is expected to
narrow due to the entry of thousands of foreign tourists to
watch the month-long soccer World Cup, Maciel said. He added
that most of the impact will be felt in July and August.
Foreign companies repatriated $2.356 billion of profits and
dividends to their headquarters abroad, just below last May's
(Reporting by Alonso Soto and Luciana Otoni; Editing by Chizu
Nomiyama, Walter Brandimarte and W Simon)