Brazil's External Accounts To Benefit From Multi-Year High Commodity Prices

• Brazilian goods exports are likely to surge to historic highs in 2021 on the back of multi-year high commodity prices.
• Fitch previously highlighted that a widening current account deficit and persistent shortfalls in capital inflows would create a significant risk of external account pressures over the coming quarters that would weaken the real and cut into reserves. 
• However, exports have outperformed expectations, and as such, its current account forecast for 2021 was revised to a deficit of 0.6% of GDP, from 2.3% previously. Following this the deficit will widen to 2.6% in 2022. 
• This revision reflects a surge in commodity prices to multi-year highs in H1 2021 as the global recovery takes hold, which has driven up Brazil's export earnings far more significantly than anticipated.

(Source: Fitch Solutions)