Apresentacao Alexandre Tombini CCBJ Toquio 15-12-2012

7/31/2019 Apresentacao Alexandre Tombini CCBJ Toquio 15-12-2012

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1

Alexandre Tombini

Governor

October 15, 2012

Brazil Economic Overview

Tokyo


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2

Brazil is among the largest countries in

terms of territory, population and GDP

Brazil has vast natural resources,including recently discovered largeoffshore oil fields, a diverse industrialbase, a dynamic and sophisticatedprivate sector, and a well-structured

public sector

Brazil is a vigorous democracy, with freemultiparty elections and a stable politicalsystem

Brazil has good relations with all itsneighbors and has increased its ties withall regions of the world

Source: IBGE

Brazil

6th largest GDP: US$ 2,475 billion (2011)

Continental country: 5th largest area8,514,877 km2

5th largest population: 191 million people(2010)


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Executive Summary

Macroeconomic and financial stability, sustainableeconomic growth and targeted social policies have allcontributed to poverty reduction and better incomedistribution

Economic growth is accelerating in the second half of2012, with inflation under control

The outlook is for sustainable economic growth overthe coming years, with substantial investmentopportunities, particularly in infrastructure


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Economic and Social

Achievements


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The main features of the macroeconomic policy

framework are inflation targeting, fiscal responsibility, andexchange rate flexibility

Macroeconomic Policy

The macroeconomic fundamentals, combined with strongprudential policy and intensive bank supervision, haveled to macroeconomic and financial stability andsustainable economic growth

Economic growth and stability, together with inclusivesocial policies, have reduced poverty and inequality andhelped 40 million people join the middle class


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6Source: BCB

Achieved Inflation Target Eight Years in a Row

0

2

4

6

8

10

12

14

16

18

jan00

jan01

jan02

jan03

jan04

jan05

jan06

jan07

jan08

jan09

jan10

jan11

jan12

%

YoY

5.3%


7/507Source: BCB

Declining Net Public Debt

*Aug 12

52,0

60,4

54,8

50,6

48,447,3

45,5

38,5

42,1

39,2

36,435,1

30

33

36

39

42

45

48

51

54

57

60

63

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012*

%o

fG

DP

-25.2 p.p.of GDP


8/508Source: BCB

Robust International Reserves

US$billion

4 5 12 12 7 7 9 10 10 9

2432 39

5260

5245

36 33 3638

49 53 54

86

180194

239

289

352

378

0

50

100

150

200

250

300

350

400

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012*

*Oct 9th


9/509Source: BCB

Brazil Has Become a Net External Creditor

US$billion

*Aug 12 estimate

7987 88 92

10310696 97

105108100 9988 92

101

131

182190 190

163165

151

136

101

75

-12

-28

-62-51

-73

-95-110

-70

-30

10

50

90

130

170

210

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012*


10/5010

Improvements Reflected in Sovereign Credit Ratings

Source: Moodys / S&P / Fitch

5

6

7

8

9

10

11

12

13

14

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Moody's S&P Fitch

Investment grade

upgrades in 2011: April: Fitch June: Moodys November: S&P

A3 / A-

Baa1 / BBB+

Baa2 / BBB

Baa3 / BBB-

Ba1 / BB+

Ba2 / BB

Ba3 / BB-

B1 / B+

B2 / B

B3 / B-


11/5011Source: IPEA

Declining Poverty and Inequality

0,50

0,51

0,52

0,53

0,54

0,55

0,56

0,57

0,58

0,59

0,60

0,61

0,620,63

0,64

0,65

0

2

4

6

8

10

12

14

16

18

20

1981

1983

1984

1985

1986

1987

1988

1989

1990

1992

1993

1995

1996

1997

1998

1999

2001

2002

2003

2004

2005

2006

2007

2008

2009

%o

fhou

seholds

Extreme Poverty Gini Index (RHS)


12/5012

Recent EconomicDevelopments

ActivityInflation

Credit & Financial System


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Economic Activity

Brazil underwent a typical business cycle downturn

There are consistent signs that growth is accelerating

Industrial production has grown for three consecutive

months

Agriculture: record grains crop expected for 2012

The services sector continues to expand faster than theoverall economy

Demand is underpinned by a strong labor market andincreasing incomes


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0,5

1,6

4,34,0

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

1Q12 2Q12 2H12* 2013*

%

Source: BCB (Focus)

Growth Will Accelerate in the 2nd half of 2012Market Forecast

Change over Previous Period (annualized)

*Focus Market Forecast (Sep 28th)


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Economic Stimulus Measures

A set of stimulus measures have been introduced since

2011 in order to help the economy resume its growth path

Stimulus measures in place:

Lower interest rates

Improved liquidity conditions for the financial system

Better financing conditions for households and firms

These measures impact the real economy with lags

Fiscal and tax incentives


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16

449

353

0

50

100

150

200

250

300

350

400

450

500

Dec06

Dec07

Sep08

Dec08

Dec09

Dec10

Dec11

Oct12*

Source: BCB

Monetary and Liquidity Stimulus MeasuresPolicy Interest Rate (% annual) Required Bank Reserves (R$ billion)

*Oct 5th

6,0

7,0

8,0

9,0

10,0

11,0

12,0

13,0

jul/11

ago/11

set/11

out/11

nov/11

dez/11

jan/12

fev/12

mar/12

abr/12

mai/12

jun/12

jul/12

ago/12

set/12

out/12


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17Source: IBGE

Unemployment Rate at Historical Low

%(seasonally

adjusted)

5

6

7

8

9

10

11

12

13

14

jan03

jan04

jan05

jan06

jan07

jan08

jan09

jan10

jan11

jan12

Aug 125.2%


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18Source: IBGE

Growing Incomes and Payroll

Jan-Aug 12 /

Jan-Aug 11+5.9%

+4.0%

+1.8%

9899

100

101

102

103104

105

106

107

108109

110

Jan11

Feb11

Mar11

Apr11

May11

Jun11

Jul11

Aug11

Sep11

Oct11

Nov11

Dec11

Jan12

Feb12

Mar12

Apr12

May12

Jun12

Jul12

Aug12

Jan11

=100

Employment Real Income Real Payroll


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Supply

Industry: consistent indications that a moderate recovery is

under way Three consecutive months of output growth

Growth in industrial employment

Improving business confidence

Increased capacity utilization

Agriculture: 2012 grains crop to be record

Services: expected to continue to grow faster than overalleconomy

Strong performance reflects structural changes in theBrazilian economy over the last decade


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1,5

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

jan12

fev12

mar12

abr12

mai12

jun12

jul12

ago12

%

monthly change

Source: IBGE

Growing Industrial Productionseasonally adjusted


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21

164

130

135

140

145

150

155

160

165

170

2007 2008 2009 2010 2011 2012*

millionto

ns

production of grains

Source: BCB

Agriculture: 2012 Grains Crop to be Record

*Sep 12 Estimate


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22Source: IBGE

Services Growing Faster than Overall Economy

1,61,5

0,8

0,5

0,0

0,5

1,0

1,5

2,0

1Q 12 2Q 12

%Q

/Q-4

Services Total GDP


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23Source: BCB

GDP Coincident Index

5,10%

0,96%

-1,49%

-0,17%

2,63%

1,88%

5,87%

-2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

1 Q 11 2 Q 11 3 Q 11 4 Q 11 1 Q 12 2 Q 12 3 Q 12*

Quarterly Growth (annualized)Seasonally Adjusted

* July-August average


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ActivityInflation



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Inflation is Under Control

Inflation is converging to the target in a nonlinear fashion

Short term: adverse supply shock

In the medium term, the global economy should have adisinflationary influence on domestic prices

External: agricultural commodities due to weather

conditions in the United States

The outlook for inflation, although negatively impactedin the short term by adverse supply shocks, is favorablein the medium term


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100

115

130

145

160

175

jun10

ago10

out10

dez10

fev11

abr11

jun11

ago11

out11

dez11

fev12

abr12

jun12

ago12

Jun10=

100

Agricultural Commodities (IC-Br in US$)

Source: BCB

Commodity Price Shock

Increase in Jul-Aug/12: +10.5%


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27Source: BCB

Achieved Inflation Target Eight Years in a Row

-

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

dez/99

jun/00

dez/00

jun/01

dez/01

jun/02

dez/02

jun/03

dez/03

jun/04

dez/04

jun/05

dez/05

jun/06

dez/06

jun/07

dez/07

jun/08

dez/08

jun/09

dez/09

jun/10

dez/10

jun/11

dez/11

jun/12

dez/12

jun/13

dez/13

yoy

%

Reference

Scenario


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ActivityInflation



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Credit and Financial System

The Brazilian financial system is wellcapitalized, liquid and holds ample provisions

Credit is growing at a sustainable pace

Access to banking services is improving


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30Source: BCB

Credit / GDP

25,8 26,0 24,6 25,728,3 30,9

35,2

40,543,7

45,2

49,051,0

-5

5

15

25

35

45

55

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012*

%o

fGDP

2009-2011: 18.3%(average growth of nominal credit)

2005-2008: 25.2%(average growth of nominal credit)

*Aug 12


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31Source: BCB

Real Estate Credit is Leading Credit Growth

37.1%

17.0%

up to Aug 2012 / Real Estate up to Jul 12

15.7%

-15

-10

-5

0

5

10

15

20

25

30

3540

45

50

jan02

jan03

jan04

jan05

jan06

jan07

jan08

jan09

jan10

jan11

jan12

%YoY

Total Corporations Households Real Estate Credit

18.5%


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17,5 17,116,5

15,7 15,7 15,5 15,1 14,7 14,7 14,6 14,2 14,0 13,912,7 12,7

11,6

0

2

4

68

10

12

14

16

18

20

Indonesia

Brazil

Turkey

UnitedKingdom

Mexico

Argentina

Canada

UnitedStates

SouthAfrica

Russia

Japan

SouthKorea

India

China

Italy

Australia

%

Source: IMF / FSI - financial sector indicators

Regulatory Capital / Risk-Weighted Assets

2012 Q2 or latest available data

Li id A t / Sh t T Li biliti


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33

111 109

81

7367

5652

45 43 43 41 3832 32

22

3

0

20

40

60

80

100

120

Brazil

Korea,

Russian

Turkey

United

Mexico

Japan

Canada

China,

Argentina

Australia

United

Indonesia

South

India

Italy

%

Liquid Assets / Short Term Liabilities




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Provisions Net of Non-performing Loans / Capital

9 8

4 4

-2 -3-5 -6

-9 -10

-16 -18 -18-22

-30

-65-70

-60

-50

-40

-30

-20

-10

0

10

20

Mexico

Brazil

Argentina

China

Turkey

SouthKorea

Indones

ia

Canada

Russ

ia

Ind

ia

UnitedKingdo

m

UnitedStates

Australia

Japan

SouthAfrica

Ita

ly

%




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3535

2000 2010

0 (20%)

>0 to 2 (22%)

>2 to 5 (40%)

>5 to 10 (16%)

>10 (2%)

# of points per 10,000 adults(% of municipalities)

0 (0%)

>0 to 2 (0%)

>2 to 5 (6%)

>5 to 10 (29%)

>10 (65%)

# of points per 10,000 adults(% of municipalities)

All municipalities have a least one bank branch, outpost or correspondent.

Access to Banking Services

Source: BCB / IBGE

Bank branches, bank advanced outposts (PAA), credit cooperatives(headquarters and outposts) and bank correspondents


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Looking Forward


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Outlook for Brazil

Demographic bonus until 2025

Major investment opportunities

Offshore oil fields (pre-salt layer)

Social gains and expansion of the middle class

Vast reserves of mineral commodities

Potential to expand cultivated area and agricultural production

Major international sports events (FIFA World Cup and Olympics Games)

Expanding and upgrading infrastructure

Reforms to increase investment, productivity andcompetitiveness

Sustainable GDP growth in the coming years


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Population Pyramid (2010)

Source: IBGE / UN

Favorable Demographics

Dependency Ratio

Note: The dependency ratio is the ratio of the sum of the populationaged 0-14 and that aged 65+ to the population aged 15-64

Brazils dependency ratio is still

declining

Brazilian population is highly

concentrated within the EconomicallyActive Population range

-10 -5 0 5 10

0-410-1420-2430-3440-4450-5460-6470-7480-8490-94100+

millions of people

men women

25

50

75

100

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050


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39

49

2517

47

39

32

66

105 118

13

23 29

0

50

100

150

200

2003 2011 2014*

E D C A/B

Source: FGV

Growing Middle Class Expanding Consumer Market

millionp

eople

Social Stratification

7.6%

37.6%

26.7%

28.1%

11.8%

55.1%

20.3%

12.9%

14.9%

60.2%

16.4%

8.6%

*FGV forecast


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Reforms to Boost Growth

Reduced electricity costs due to lower taxes andrenewal of concessions

Pro-growth fiscal and tax reforms

Public sector pension reform

Tax-advantaged bonds for infrastructure and R&Dinvestment

Payroll tax cuts


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Increased public and private investment ininfrastructure

Reforms to Boost Growth

Building a skilled labor force

Science without frontiers 100 thousand scholarshipsfor undergraduate and graduate studies abroad

Pronatec expansion of professional and technologicaleducation, totaling 8 million trainees over four years

Initiative for ports and airports to be announced (4 airportconcessions already auctioned)

Concessions and public-private partnerships for

highways and railways


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42Source: Ministry of Planning and Budget

Major Infrastructure Investments Planned for 2012-2015

Other

Transportation

Oil and Gas

Energy

Affordable Housing R$ 390 billion

R$ 300 billion

R$ 228 billion

R$ 117 billion

R$ 160 billion

Total: R$ 1.2 trillion


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43Source: Federal Government of Brazil

Logistics Investment Program

Total

Investment

US$ 65.3billion

US$ 17.2 bnwithin 25 years

US$ 39 bnwithin 5 years




US$ 11.5 bn

within 5 yearsHighways

US$ 20.6 bn

7,500 km

RailwaysUS$ 44.7 bn

10,000 km

Exchange Rate on August 31st


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Railways

Itaqui

Vila do Conde

Rio Grande

Suape

Salvador

Ilhus

Vitria

Rio de JaneiroItagua

Santos

Paranagu

Pecm

Railways

New projects Under evaluation

Under construction (PAC)

Current railway system

Circular Railway SP Northbound

Circular Railway SP Southbound

Access to the Port of Santos

Lucas do Rio Verde Uruau

Uruau Corinto Campos

Rio de Janeiro Campos Vitria

Belo Horizonte Salvador

Salvador Recife

Estrela dOeste Panorama Maracaju

Maracaju Mafra

So Paulo Mafra Rio Grande

Aailndia Vila do Conde


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Highways

HighwaysPecm

Rio Grande

Itaqui

Suape

Salvador

Vitria

Rio de Janeiro

ItaguaSantos

Paranagu

Under construction (PAC)

Current highway system

BR-060 DF/GO,

BR-153 GO/MG

BR-262 MG

BR-116 MG

BR-040 DF/GO/MG

BR-101 BA

BR-262 ES/MG

BR-153 TO/GO

BR-050 GO/MG

BR-163 MT

BR-163 MS,

BR-262 MS,

BR-267 MS

E I


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46Source: EPE

Energy Investment

269

749

79

Estimated Investment (2012-2021)R$ billion

Supply of electricity

Oil and natural gas

Supply of liquid biofuels

R$ billion

2012-2021

Supply of electricity 269

Generation 213

Transmission 56

Oil and natural gas 749

Exploration and production of oil and natural gas 547

Supply of petroleum products 198

Refining 174Transportation infrastructure 24

Supply of natural gas 4

Supply of liquid biofuels 79

Ethanol (production plants) 71

Ethanol (pipeline and port infrastructure) 7

Biodiesel (production plants) 1

Total 1097


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0,00,10,10,20,3

0,30,30,40,4

1,83,2

3,811,2

1,51,61,71,7

2,12,5

3,23,4

8,414,0

So DomingosBatalha

Passo So JooGaribaldi

Ferreira Gomes

ColderSimplcio

MauSanto Antnio do Jar

Teles PiresSanto Antnio

JirauBelo Monte

Porto PrimaveraJupi

Foz do AreiaSo Simo

ItumbiaraPaulo Afonso IV

XingIlha solteira

Tucuru I IIItaipu (including Paraguay)

0 5 10 15

Potency (GW)

Source: ANEEL

Major Hydroelectric Plants under Construction

Power Plants Under Construction22 GW

Major Existing Power Plants86 GW

Oil R S G


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48Source: Petrobras

Oil Reserves Set to Grow

0

5

10

15

2025

30

35

40

45

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

future*

deepwater offshore fields(pre-salt layer)

*estimated volume

Tupi and Iracema*(8 billion boe)

Franco* (4.5 billion boe)

Libra* (8 billion boe)

Iara* (4 billion boe)

Guara* (2 billion boe)

crude oil, LNG and natural gas

billionbarreloilequivalent(boe)

Final remarks


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Macroeconomic stability

Final remarks

Inflation under control Declining net public debt (long term trend)

Low external vulnerability net external creditor

Growth is accelerating Financial stability

Financial sector is well capitalized, liquid and provisioned

Room for credit growth Expansion of the middle class (consumer class)

Multiple investments opportunities


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Brazil Economic Overview

Alexandre Tombini

Governor

Documents

Apresentacao Alexandre Tombini CCBJ Toquio 15-12-2012