The Current Account Deficit and Fiscal Policy

BRAZIL ECONOMICS - Report 09 Dec 2013 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore
Between December 2012 and the end of last October, the current account deficit rose from US$ 54.2 billion, or 2.4% of GDP, to US$ 82.2 billion, or 3.7% of GDP (Graph 1). The worsening of the current accounts closely follows the decline of the trade balance, which are near zero and are only not worse because of the artifice of successive paper exportations of oil platforms by Petrobras to a foreign subsidiary, with no change in their location. What explains this behavior of the current accounts? Basically speaking, growth of total domestic absorption has been far outpacing GDP growth, and Br...

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