Apresentação do Presidente Alexandre Tombini em Londres 2013-10-03

8/13/2019 Apresentao do Presidente Alexandre Tombini em Londres 2013-10-03

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1

Alexandre Tombini

Governor

October 2013

Brazil Economic Outlook

London


2/25

2

Main topics

Inflation

Growth

UMP Exit


3/25


4/25

4

5

10

15

20

Jan06

Jul06

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

Jan13

Jul13

%

Policy rate Swap reference rate - 360-day term

7.0

7.4

7.8

8.2

Nov12

Dec12

Jan13

Feb13

Mar13

Apr13

%

Source: BCB/BM&F

Monetary policy actions

BCB acted in early 2013 to mitigate second order effects of supply shocks. After

tapering signaling, BCB mitigate the ER pass-through risk

Communication

Policy rate


5/25

5Source: IBGE / BCB (Focus)

Inflation is receding

Jun 136.7

Aug 136.1

Dec 135.8

2

3

4

5

6

7

8

Jan13

Feb13

Mar13

Apr13

May13

Jun13

Jul13

Aug13

Sep13

Oct13

Nov13

Dec13

Yo

Y%

CPI Expected CPI (Focus)


6/25

6

Other CPIs also decelerating

Source: FGV / Fipe

IPC-M Sep 13

5.37%

IPC-C1 Aug 13

5.36%

IPC-Fipe Sep 13

4.58%

Chained series of IPC-10, IPC-M and IPC-Br; Chained series of IPC-Fipe weekly data

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

Dec10

Feb11

Apr11

Jun11

Aug11

Oct11

Dec11

Feb12

Apr12

Jun12

Aug12

Oct12

Dec12

Feb13

Apr13

Jun13

Aug13

Oct13

Dec13

YoY

%

IPC-10, IPC-M and IPC-Br IPC-C1 IPC-Fipe


7/257Source: IBGE / BCB

Inflation within target bands

Ten consecutive years of inflation in target zone in 2013

0

2

4

6

8

10

12

14

16

18

Dec99

Dec00

Dec01

Dec02

Dec03

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Y

oY%

CPI Inflation Report (Sep 13)


8/258Source: Bloomberg

* qoq sa

-0.6

-0.4

-0.3-0.2

-0.2

0.0

0.0

0.2

0.2

0.3

0.3

0.3

0.5

0.5

0.6

0.8

0.8

1.0

1.5

1.6

-1 0 1 2

Italy

Spain

RussiaEuro Area

France

Germany

Mexico

Poland

South Africa

USColombia

UK

Australia

Canada

Brazil

Chile

South Korea

Japan

Turkey

China

Real GDP QoQ Growth in 1Q13

-0.7

-0.3

-0.3-0.1

0.3

0.4

0.4

0.5

0.5

0.6

0.6

0.7

0.7

0.7

0.9

1.1

1.5

1.7

2.1

2.2

-1 0 1 2 3

Mexico

Italy

RussiaSpain

Euro Area

Poland

Canada

Chile

France

Australia

US

UK

Germany

South Africa

Japan

South Korea

Brazil

China

Turkey

Colombia

Real GDP QoQ Growth in 2Q13

Growth dynamics in 2013


9/259Source: IMF (WEO forecasts, April and July 2013)

Economic growth is expected to gather pace

* April.

-1.8

-1.6

-0.6

-0.20.3

0.9

1.7

1.7

2.0

2.02.5

2.5

2.8

2.9

3.0

3.15.6

7.8

-5 0 5 10

Italy

Spain

Euro Area

FranceGermany

UK

US

Canada

Japan

South AfricaRussia

Brazil

South Korea*

Mexico

Australia*

WorldIndia

China

2013

0.0

0.7

0.8

0.91.2

1.3

1.5

2.2

2.7

2.93.2

3.2

3.3

3.3

3.8

3.96.3

7.7

0 5 10

Spain

Italy

France

Euro Area

Japan

Germany

UK

Canada

US

South AfricaBrazil

Mexico

Russia

Australia*

World

South Korea*India

China

2014


10/2510Source: IBGE

-2.4-1.9

-1.4

1.5

4.7

3.6

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13

QoQ

S.A

(%

)

Gross Fixed Capital Formation

Stronger investment


11/2511

1.82.4

4.2

1

23

4

5

6

7

Feb12

May12

Aug12

Nov12

Feb13

May13

Aug13

YoY%

Employment Real Income Real Payroll

4

6

8

10

12

14

Aug02

Aug03

Aug04

Aug05

Aug06

Aug07

Aug08

Aug09

Aug10

Aug11

Aug12

Aug13

M

oM%s

a

55

75

95

115

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

Jan13

Jul13

Retail Sales Retail Sales (including automobiles and construction materials)

2007=100

5.4%

(YoY)

5.8%

(YoY)

Source: BCB/IBGE

Support for domestic demand

Unemployment Rate Employment and Labor Income

Credit OutstandingRetail Sales

16.1

7.7

05

10152025

303540

Feb08

Aug08

Feb09

Aug09

Feb10

Aug10

Feb11

Aug11

Feb12

Aug12

Feb13

Aug13

YoY%

Total Households (nonearmarked credit)


12/2512

160.1161.9

187.3

120

125

130

135

140

145

150

155

160

165

170

175

180185

190

2007 2008 2009 2010 2011 2012 2013*

milliontons

production of grains

Source: IBGE

2013/2012

= 15.7%

Estimated in August 2013

Record grain harvest expected in 2013


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13

Reforms to boost growth

Tax reforms to simplify the tax system and reduce costs

Tax incentives for infrastructure and R&D investment bonds

Payroll tax cuts

Measures to increase competitiveness and investments

Building a skilled labor force (Science without Frontiers and

Pronatec Programs)

Concessions program revamped

Highways, railroads, ports and airports

Oil & gas


14/25

14Source: IMF /FSI (latest available data)

Brazil has a sound financial system

11

12

13

13

14

14

14

14

14

15

15

16

16

17

17

18

10 12 14 16 18 20

Spain

Australia

Italy

Russia

India

Japan

Korea

France

United States

Canada

South Africa

United Kingdom

Mexico

Brazil

Turkey

Germany

Regulatory Capital to Risk-WeightedAssets

-74

-28

-22

-21

-16

-15

-15

-12

-10

-6

-3

-3

9

10

-100 -50 0

Italy

Spain

South Africa

Japan

United Kingdom

Australia

United States

India

Russian

Canada

Turkey

Korea, Republic of

Mexico

Brazil

( ProvisionsNPL) / Capital

28

36

38

44

47

48

51

76

77

80

88

111

141

183

0 50 100 150 200

India

South Africa

United Kingdom

Australia

Mexico

Canada

Japan

Turkey

United States

Italy

Russian

Korea,

Germany

Brazil

Liquid Assets to Short Term

Liabilities


15/25

15Source: BCB

Banks have a low share of external funding

Jul 13

Origin of Bank Funding

95.788.8

82.190.6

4.311.2

17.9

9.4

0%

20%

40%

60%

80%

100%

Public-owned Private-owned Foreign-controlled Total

Domestic External


16/25

16

376.0

0

50

100

150

200

250

300

350

400

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013*

US$billion

Source: BCB

International Reserves Net External Creditor

*Aug 2013

BrazilNet External Creditor

as of Oct 1st

-81.8

-110

-70

-30

10

50

90

130

170

210

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013*

US$billion


17/25

17

External Debt of EMEs

Source: Datastream / IIF

21.4

21.4

27.9

29.6

29.8

31.4

34.9

44.7

48.8

20.9

21.4

28.7

25.6

30.2

29.5

32.7

43.9

48.3

15 25 35 45 55

India

Colombia

Indonesia

Brazil

Mexico

Peru

South Africa

Chile

Turkey

External Debt / GDP

2012 2013**IIF forecast.

9.4

13.6

13.6

16.1

16.6

23.9

25.9

26.0

27.7

9.4

13.3

13.5

16.2

19.4

22.5

25.2

24.1

27.1

5 10 15 20 25 30

Brazil

Peru

Colombia

South Africa

Chile

Mexico

India

Indonesia

Turkey

Short Term External Debt / Total

2012 2013**IIF forecast.

* Brazil data includes intercompany debt transactions and domestic debt in

hands of foreign investors


18/25

18Source: IMF (Fiscal Monitor April 2013)

Low nonresident holdings of Gov. debt

6.7

8.9

14.317.6

19.4

23.5

29.1

29.6

31.9

32.0

32.1

33.2

35.1

61.3

63.5

72.2

0 20 40 60 80

India

Japan

South KoreaBrazil

Russian

Canada

Spain

Turkey

UK

South Africa

US

Mexico

Italy

Germany

France

Australia

2012 (% of Total Debt)


19/25

19Source: UNCTAD

Brazil is leading recipient of FDI

197.9

114.7

85.7

82.7

50.6

48.6

48.5

46.9

43.3

42.8

40.8

35.2

32.5

30.6

29.2

0 50 100 150 200

USA

China

Belgium

Hong Kong

UK

Singapore

Brazil

Germany

Russian

Ireland

Spain

Australia

Switzerland

France

Saudi Arabia

2010

226.9

124.0

103.3

96.1

66.7

65.8

64.0

52.9

51.1

41.4

40.9

40.4

34.3

31.6

29.5

0 50 100 150 200

USA

China

Belgium

Hong Kong

Brazil

Australia

Singapore

Russian

UK

Canada

France

Germany

Italy

India

Spain

2011

146.7

119.7

72.5

65.3

62.5

58.9

54.4

48.5

47.2

44.1

39.6

27.3

26.4

22.6

19.3

0 50 100 150

USA

China

Hong Kong

Brazil

UK

France

Singapore

Australia

Canada

Russian

Ireland

India

Chile

Luxembourg

Belgium

2012


20/25

20Source: UNCTAD

19.0

26.3

27.9

82.5

111.0

120.3

138.6

171.5

319.3

0 100 200 300 400

South Africa

Turkey

India

Indonesia

Mexico

Brazil

Colombia

Peru

Chile

FDI / CAD (in %, 2012)

-6.6

-6.5

-5.1

-4.0

-3.5

-3.5

-3.3

-3.2

-1.3

-8 -6 -4 -2 0

Turkey

South Africa

India

Chile

Peru

Colombia

Indonesia

Brazil

Mexico

CAD (12M Acc., %GDP)*

* June 2013

CAD comfortably financed by FDI


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21

0

5

10

15

20

25

30

35

40

Jan12

Feb12

Mar12

Apr12

May12

Jun12

Jul12

Aug12

Sep12

Oct12

Nov12

Dec12

Jan13

Feb13

Mar13

Apr13

May13

Jun13

Jul13

Aug13

accum.

12mon

ths(US$billion)

Equities Fixed Income

Source: BCB

Capital flows

Flows increased even after tapering talk (May 22 2013)


22/25

22

FX interest rate swaps and FX repo program (launched on

Aug 22)

Goal: provide hedge to economic agents, liquidity to domestic FX market

and reduce excessive market volatility

Measures (weekly auctions during 2013):

FX interest rate swap auctions: USD2 billion

FX Repo: USD1 billion

The program succeeded in taming ER volatility and

providing FX hedge and liquidity

USD100 billion (equivalent) until the end of 2013,

considering issues before the program announcement

Timely Central Bank action to mitigate risks


23/25

23Source: BCB

Efforts to reduce risks are successful

* From Aug 22 through Oct 2.

1/ The Bloomberg U.S. Dollar Index tracks the performance of a basket of ten leading global currenciesversus the U.S. Dollar (JPY, MXN, AUD, GBP, CAD, SGD, CHF, CNH, KRW and EUR).

-17.9

-16.5

-15.9

-9.1

-7.8

-7.5

-6.7

-5.5

-3.7

8.6

-25 -15 -5 5 15

Indonesian Rupiah

Australian Dollar

Brazilian Real

Indian Rupee

Czech Koruna

Mexican Peso

Polish Zloty

Turkish Lira

South African Rand

Russian Ruble

% Change in 1M ATM ImpliedVolatility*

-4.2

-1.9

-0.2

0.0

1.41.4

1.6

1.7

1.7

2.2

2.2

2.3

2.5

2.6

2.6

3.5

4.1

4.26.4

11.1

Indonesian Rupiah

Bloomberg USD Index 1/

Mexican Peso

Turkish Lira

YenColombian peso

Norwegian Krone

Euro

Canadian Dollar

Chilean Peso

Swedish Krona

Swiss Franc

Poland Zloty

Russian Ruble

South African Rand

Indian Rupee

Sterling pound

Australian DollarNew Zealand Dollar

Real

BRL leads appreciation since the FXprogram*

-24.4

-21.9

-18.6

-18.0

-16.9

-12.5

-11.8

-11.4

-9.3

-7.9

-7.4

-6.3

-5.9

-5.2

-4.4

-3.0

3.8

5.6

-40 -20 0 20

South Africa

China

Brazil

Germany

Russia

Chile

United Kingdom

Turkey

Mexico

Belgium

Japan

France

Peru

Spain

Colombia

Ireland

Portugal

Italy

CDS USD SR 5Y Corp - % Change since

BCB's Announcement of Regular FX

Intervention in 2013*


24/25

24

Alexandre Tombini

Governor

October 2013

Brazil Economic Outlook

London


25/25

25

BCB Central Bank of Brazil

BM&F Brazilian Exchange Company

CAD Current Account Deficit

EME Emerging countries

FDI Foreign Direct Investment

FGV Getlio Vargas Foundation

Focus Brazilian Market Survey sponsored by BCB

IBGE Brazilian Institute of Geography and Statistics

IMF International Monetary Fund

UMP Unconventional Monetary Policy

UNCTAD United Nations Conference on Trade and Development

Glossary

Documents

Apresentação do Presidente Alexandre Tombini em Londres 2013-10-03