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Japan and Brazil Economic OutlookBrazilian Development Prospects

XVII Joint Meeting of the Japan-Brazil CommitteeSeptember 9-10, 2014

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The world: times of catching up and increasing relevance of developing nations

Annual Growth Rates, %

Avg Growth 2008-2008 2009-2014 2009-2018Advanced Economies 2,4 1,0 1,6Emerging Markets 6,5 5,2 5,3Source: IMF, WEO

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Brazil, macroeconomic fundamentals

Consolidated Public Sector Net Debt (as % of GDP) Gross Debt

International Reserves (US$ billion)

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Source: IMF World Economic Outlook Database, October 2013; IBGE

Brasil: Macroeconomic fundamentals (2)

CPI Inflation (IPCA index, % YoY)

Current account results, % GDP

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Source: Ministry of Finance*CAGED: 2013. 2014**12 months up to feb 14

Brazil: Economic and Social Progress

Formal employment and unemployment rates

Source: BCB

Brazil vs USA and Europe, unemployment rate, desazonalised, %

Income classes, millions of peopleJob creation

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Economic and social progress (2)

GDP per capita, R$ thousand - 2013 prices

Public investments in education (% of GDP)

Poverty and inequality trends

7Sources: National Agency for Civil Aviation (ANAC), National Agency for Aquatic Transportation (ANTAQ), Brazilian Association of Highway Concessionaires (ABCR) and Brasilian Association of Automative Vehicle Manufactures (ANFAVEA).

Attractive and expanding internal market

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Brazil: potential of agriculture, oil and exports

IMF EXPORT GROWTH PROJECTIONS

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SECTORS 2014Q1 US$bi 2009-12 2014-17Accumulated % Variation

Growth rate (linear avg; % per year)

INDUSTRY 372 488 31.1 5.6

INFRASTRUCTURE 181 243 34.4 6.1300

HOUSING 300 366 21.9 4.0

AGRICULTURE & SERVICES 488 624 28.1 5.1

TOTAL 1,341 1,721 28.4 5.1Source: BNDES

Brazil: investments forecast 2014-2017

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Source: BNDES

Brazil: investments forecast for industry, 2014-2017

2014 Q1 US$ billion 2009-12 2014-17Acc. % change

Growth rate (linear avg; %

per year)

INDUSTRY 372 488 31 5.6Oil & Gas 134 206 53 8.9Mining 21 23 9 1.7Automotive 19 31 63 10.2Paper & Pulp 8 11 41 7.1Chemical 9 11 25 4.5Steel 16 7 57 15.6Electronics 9 10 13 2.4Health 4 5 26 4.7Aircraft 1 6 294 31.6Other Industries 150 177 18 3.4

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Brazil: investments forecast for infrastructure, 2014-2017

Source: BNDES

2014 Q1 US$ billion 2009-12 2014-17Acc.%

change

Growth rate (linear avg; %

per year)

INFRASTRUCTURE 181 243 34 6.1Electricity 75 81 9 1.7Telecommunications 40 52 29 5.2Social Infrastructure 21 38 82 12.7Highways 23 27 14 2.7Railways 12 24 96 14.4Ports 7 17 166 21.6Airports 3 4 46 7.9

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Ongoing program of infrastructure-related concessions

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2/3 of long term loans in Brazil100% State ownedStable institutional funding Instruments

Direct OperationsIndirect OperationsMSME (financing and guarantee)Exports (Pre and Post shipment)Project financeGrants Investment bank

BNDES

BNDES KFW CDB JFC

Assets 367.8 657.3 1,191.6 318.4

Outstanding Loans 254.0 526.4 1,016.9 272.4

Net Profit 3.0 3.1 9.9 -3.6

ROA (%) 0.90 0.47 0.92 -1.13

NPL (%) 0.06 0.21 0.30 2.98

2012 (in US$ billion)

Source: BNDESSource: BNDES

Source: Banks' balance sheets.

Estimated market value (US $ b.) 45.4Nº firms with direct support 203Nº Investment Funds 44

Equity Portfolio

BNDES – highlights and comparison with peers

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BNDES’ contribution to Brazilian development (1)

*12 months, up to February/2014

to 2013

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41 53

104

172

231261 275

811 12

2325 25

32

-5,0

5,0

15,0

25,0

35,0

45,0

55,0

65,0

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2013

Support for MSME: disbursements + number of firms

Number of MSME, 1,000 Disbursements, US$ billion)

BNDES’ contribution to Brazilian development (2)

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Economic and social inclusion will generate opportunities to rise the consumption of goods and services and expand the housing industry.Expanding ongoing infrastructures (telecom, energy and logistics) will induce systemic productivity, improve standards of living and increase demand for suppliers of goods and services.Oil and gas will be a relevant source of foreign revenue and vast opportunities for the supply industry. Due to its consolidated competitiveness, the current export base (mineral and agricultural commodities) will continue to offer investment opportunities.Industry and services in Brazil still require higher investment in capabilities and innovation to induce international competitiveness.The real economy provides vast opportunities for private financial industry to enter into long-term financing.

Main takeaways

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Japan and Brazil Economic OutlookBrazilian Development Prospects

XVII Joint Meeting of the Japan-Brazil CommitteeSeptember 9-10, 2014