Concerns about the fiscal deficit in the region’s main economy generated strong pressure on its currency and reserves.
Brazil suffered a loss of US$18,010 million in 2024, the largest amount since 2020. The “flight” occurred in a context of growing fiscal deficit and strong devaluation of its currency, the real.
The data emerged from a report by the Central Bank of Brazil (BCB). According to the entity, the result was driven by net outflows in the financial sectorwhich includes foreign investments, profit remittances and interest payments, despite a net entry due to its trade balance.
The Brazilian real devalued strongly in 2024 due to concerns about the fiscal deficit
It is worth remembering that The Brazilian real depreciated more than 27% last yearits biggest drop since the first year of the Covid-19 pandemic. In addition, it was the second highest since 2015 (-48.3%), when, in the midst of the political crisis that ended with the dismissal of President Dilma Rousseff, Brazil suffered two years of recession.
According to the consulting firm Austin Rating It was the currency that lost the most value this year among those of the G20 countries (largest economies in the world) and the sixth in the world, only surpassed by South Sudan (-72%), Ethiopia (-56.5%), Nigeria (-41.7%), Egypt (-39 .2%) and Venezuela (-30.8%), highlighted the EFE agency.
The currency It reached historic lows in the last two months of 2024. In December alone, Latin America’s largest economy recorded a net outflow of US$26.41 billion, according to BCB data. In the market they attributed this to the investor distrust in fiscal policy of the Lula Government, which, since taking office in January 2022, has promised to reduce Brazil’s primary fiscal deficit to zero and has so far failed to do so.
According to a report released by the same Central Bank, The interannual deficit of public accounts until November rose to the equivalent of 9.50% of the gross domestic product (GDP) from Brazil.
In the few days of 2025 the real has recovered groundstrengthening by around 1% against the US dollar in the spot market.
Source: Ambito
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