September 24, 2013 / 6:53 PM / in 4 years

UPDATE 1-Brazil current account deficit widens in August vs yr ago

BRASILIA, Sept 24 (Reuters) - Brazil’s current account deficit widened in August to $5.505 billion from the same month a year ago as the country’s trade surplus shrank rapidly, central bank data showed on Tuesday,

A widening current account deficit is likely to increase Brazil’s borrowing needs and the cost of credit as well as hit investor confidence.

The country had been expected to post a deficit of $5.1 billion for August, according to the median forecast of 23 analysts in a Reuters survey. The country had a current account deficit of $2.55 billion in August 2012.

It reported a current account deficit in July of $9.018 billion.

Brazil, a major producer of meat, soy and iron ore, has seen its exports dwindle this year on tepid demand abroad and a drop in the value of commodities. Imports on the other hand have remained robust in Latin America’s largest economy.

The central bank revised down its estimates for the country’s trade surplus in 2013 to $2 billion from $7 billion previously.

Foreign direct investment in Latin America’s largest economy was $3.775 billion in August, above market expectations of $3.5 billion.

In the 12 months through August, the current account deficit was equivalent to 3.6 percent of gross domestic product, up from 3.46 percent in July.

Central bank chief Alexandre Tombini said earlier on Tuesday that the current account deficit was “manageable” and that he expects it to fall to back to around 3 percent of GDP.

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