Brazil on Thursday posted a current account surplus of $1.74 billion for September, up 32 percent from a year earlier as booming exports of goods like automobiles and soybeans, reinforced its economy against foreign shocks.

The surplus was largely in line with market expectations, although foreign direct investment of $646 million, down from $739 million in September last year, was slightly lower than expected.

Nevertheless, economists said the results were a positive sign for the Brazilian economy as it recovers from a recession in 2003 and years of lackluster growth before that. It is expected to grow more than 4 percent this year.

"On the whole I thought the result was quite satisfactory, especially with regard to the current account surplus, which has almost reached $10 billion over the last 12 months," said Sandra Utsumi, an economist at BES Investimento in Sao Paulo.

"Surely we'll be in a much more comfortable position in case volatility in the foreign market starts to pick up in the short term."

Brazil's current account balance -- its widest measure of all foreign transactions which includes trade in goods as well as "invisibles" like banking and tourism -- was for years seen as its Achilles' Heel. Its long-standing deficit reflected the economy's dependence on foreign financing and made it especially vulnerable to the whims of investors abroad.

But the country posted its first current account surplus in 2003 for the first time in 11 years and is expected to do so again in 2004. Driving the turnaround has been a sharp increase in Brazilian exports, which have themselves been fueled by a more competitive currency, record agricultural crops and demand for food and metals from countries like China.

Exports this year have been driven by sales of commodities like soybeans and iron, and manufactured goods like automobiles and footwear.

Brazil, South America's largest economy, is expected to export $94 billion in 2004 and post a record trade surplus of $32 billion this year.

September's current account surplus -- a record high for the month -- was equivalent to 1.80 percent of gross domestic product in the 12 months to September, up from 1.74 percent in the 12 months to August, the central bank said in a statement. said at a news conference.

The central bank expects the surplus to slip to $900 million in October although FDI should close the month at $1.6 billion. So far this month, FDI has reached $1.1 billion, said Altamir Lopes, head of the bank's economics department.In the first nine months of the year, FDI reached $12.4 billion, up from $6.5 billion in the same period of 2003.

(From Reuters, October 21, 2004)

____________