Latin America

RGE Monitor's Newsletter - Nouriel Roubini - Chairman

In Brazil, the balance of payments printed only a slight surplus in 2008, US$2.9 bn compared to a huge surplus of US$87.4 bn in 2007. For 2009, the data so far suggest a much weaker reading as well. In fact total flow of FDI of only US$11 bn is expected in 2009, down from US$45 bn in 2008 reflecting the sluggishness of capital markets and the sharp contraction in the advanced economies, the main sources of those flows in the past. At the same time, some recovery of portfolio flows is likely if there is a marginal bounce back in risk appetite vis-à-vis 2008. Total capital and financial accounts inflow might amount to around US$17 bn, nearly matching the estimated current account deficit of US$19.2 bn, characterizing a nearly zero balance of payments for 2009.