Brazil’s current account deficit narrowed more than markets anticipated in May, reaching $3.185 billion, the central bank reported on Friday. The result was well below the median forecast of a $4.2 billion shortfall and marked the smallest May deficit since 2024. Over twelve months, the gap contracted to 2.6% of gross domestic product, the lowest level since October 2024, as a widening trade surplus and a surge in foreign direct investment reinforced the country’s external accounts.

The improvement was driven by a $7.0 billion goods trade surplus, with exports rising 6.4% year-on-year. However, the services deficit widened to $5.2 billion, pressured by a $1.3 billion travel shortfall as Brazilians’ spending abroad outpaced foreign visitors’ outlays. Net income payments to the rest of the world remained elevated at $5.5 billion, including $4.2 billion in profit and dividend remittances. Crucially, net foreign direct investment inflows jumped to $8.0 billion in May, more than double the figure a year earlier, and covered the current account deficit with room to spare. Portfolio flows, by contrast, recorded a net outflow of $5.5 billion, driven by sales of equities and domestic fixed-income securities.

Viewed from Bogotá, the fiscal picture is less reassuring. Colombia’s independent fiscal watchdog, the CARF, warned that the government’s medium-term fiscal framework underestimates spending and overestimates revenue. The committee projects the fiscal deficit could reach 4.1% of GDP, double the government’s 2.1% estimate, and that net public debt will hit a record 61% of GDP. The CARF calculates that an adjustment equivalent to 3.7% of GDP is needed to meet the official deficit target of 0.5% of GDP, a challenge that will fall to the incoming administration.

In Morocco, fiscal pressures are also building. The budget deficit widened to 30.1 billion dirhams ($3.0 billion) in the first five months of 2026, up from 26.7 billion a year earlier, as spending on goods, services and debt interest outpaced revenue growth. The ordinary balance swung into deficit, eroding a surplus recorded in the same period of 2025. For Brazil, the central bank projects a full-year current account deficit of $56 billion (2.1% of GDP), with the next quarterly monetary policy report providing an updated assessment. In Colombia, the new government’s fiscal strategy—whether spending cuts or a tax reform—will be the next milestone to watch.