p130309 brazil world crisis
TRANSCRIPT
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BRAZIL AND THE
WORLD CRISIS
Minister of Finance
Guido Mantega
March 2009
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Worsening of World Crisis
No solution to the financial crisis
Strong deterioration of economic conditions
Brazil has one of the most favorable conditions to
face the crisis
Government measures smooth the impacts of
the crisis and allow an easier recovery
Brazil was one of the last countries hit by the
crisis and can be one of the first to come out
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Source: JP Morgan -GDW Elaborated by: MF/SPE
Real GDPReal GDPReal GDPReal GDP(% over previous period)(% over previous period)(% over previous period)(% over previous period)
-15
-10
-5
0
5
10
1Q08 2Q08 3Q08 4Q08 1Q09
1Q08 0.9 1.1 2 2.7 2.8 5.2 6.7 6.8 8.22Q08 2.8 0 -1.8 -0.7 -3.7 -1.7 6.5 7.4 -5.5
3Q08 -0.5 -2.8 -2.2 -1.0 -2.3 -2.2 6.9 -0.2 -2.8
4Q08 -6.2 -6.0 -7.1 -5.7 -12.7 -8.2 -13.6 -4.0 -7.8
1Q09 -5.5 -5.0 -5.0 -5.0 -12.0 -5.0 -0.5 -4.0 -7.0
United
States
United
KingdomItaly Euro area Japan Germany Brazil Chile Hong Kong
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World Crisis Smoother Impact on Brazilian
Internal Auto Market (tsd units)Country Jan/09 Jan/08 Change %
USA
(Light vehicles)655.2 1.039.1 - 36.9%
Japan 301.7 376.6 - 19.9%
Germany
(Automobiles)189.4 220.4 - 14.1%
France
(Automobiles and light
commercials)
178.1 199.6 - 10.8%
Italy
(Automobiles)157.4 233.7 - 32.6%
Spain
(Automobiles)59.4 101.6 - 41.6%
Argentina 33.7 55.2 - 38.9%
Mexico(Light vehicles)
69.7 96.8 - 28.0%
Brazil 197 215 - 8.1%
Sources: VDA. CCFA. Anfac. Adefa. Amia. Wards AutoInfoBank. AutoNews Reuters/Japan AutomobileDealers Association
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Employment Level*
(Difference between employees hired and dismissed %)
*7.200 enterprises from 36 countries, of which 150 are from Brazil.Source: Grant Thorton International Elaborated by: MF/SPE.
71
27
33
54
31
20
33
20
(12) (9)
8
(21)
4
(4)
n.a.0
-40
-20
0
20
40
60
80
Brazil EU NAFTA Latin
America
Asia
(Pacific)
Nordic
Countries
Asia (East) World
Average
2008
2009
Employment situation better that in the rest of the world
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The worsening of the economic
situation leads to:Higher interest rates
Higher public debt
Higher primary surplus
Lower investments
Fall of product, unemployment
increase, economic fragility
Brazil: In former crisis proBrazil: In former crisis proBrazil: In former crisis proBrazil: In former crisis pro
cyclical measurescyclical measurescyclical measurescyclical measures
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Due to macroeconomic soundness, Brazilcan soften the impact of the crisis:
Active monetary policyExpand creditReduction of interest rate
Compensatory fiscal measures
Tax exemptions
Increase of public investments
Countercyclical measuresCountercyclical measuresCountercyclical measuresCountercyclical measures
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Measures to fight the CrisisMonetary Policy and Credit
Reduction of banking reserves requirements and
interest rate
Credit for Agriculture and Car Industrie
Expansion of State-Owned Bank credit and
capitalization of BNDES US$ 42,5 billions.
Increase of pre-shipment export financing (ACC) Increase of credit lines to finance private
external debt
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Fiscal Policy
Tax reduction in IVA (IPI) transport
Tax reduction in credit
Tax reduction in personal income taxbrackets
Infrastructure investment increase (PAC)
New Housing Program 1 million units
Measures to fight the Crisis
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Why is Brazil in betterconditions than most to
solve the crisis?
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World Financial CrisisWorld Financial CrisisWorld Financial CrisisWorld Financial Crisis
WORLDRECESSION
NEGATIVEGDP
EXTERNAL TRADE
DECREASES
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Source: IBGE Elaborated: MF/SPE
INVESTMENT % GDP
16,8%17,0%
16,4%
15,3%
16,1%15,9%
16,4%
17,5%
19,0%
12%
13%
14%
15%
16%
17%
18%
19%
20%
2000 2001 2002 2003 2004 2005 2006 2007 2008
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Sales VolumeSales VolumeSales VolumeSales Volume ---- RetailRetailRetailRetail(%(%(%(% yoyyoyyoyyoy))))
6.0
2.8
-10
-5
0
5
10
15
20
Jan
07
Mar
07
May
07
Jul
07
Sep
07
Nov
07
Jan
08
Mar
08
May
08
Jul
08
Sep
08
Nov
08
Jan
09
PMC
PMC expanded*
(*) includes vehicles, motorcycles, spare parts and housing construction materials.Source: IBGE. Elaborated by: MF/SPE
PMC = Monthly Trade Inquiry
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Sovereig Wealth Fund
Fiscal Saving of 0,5% GDPin 2008
Bigger one primary surplusin 2008
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Better Fiscal PerformanceBetter Fiscal PerformanceBetter Fiscal PerformanceBetter Fiscal Performance(Deficit as % GDP)(Deficit as % GDP)(Deficit as % GDP)(Deficit as % GDP)
0.0%
0.8%
4.0%
-3.3%
-6.5%
-4.7%
-2.5%
-2.7%
-2.8%
-3.0%
-3.8%
-6.7%
-8.8%
-11.1%
-0.4%
-0.5%
-1.5%
-3.8%
-16.9%
-4.1%
Mexico
Brazil
China
Germany
S.Africa
Japan
Russia
UK
India
US
2008 2009
Source: Standard & Poors Elaborated by: MF/STN
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World Financial CrisisWorld Financial CrisisWorld Financial CrisisWorld Financial Crisis
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Unleveraged Housing Market
(% GDP)
111
8573
5346
2013 10 9 8 6 2 2
166
249
156
137125
141
63
46
17
33 2837 41
Netherlands
US
England
Ireland
Spain
S.A
frica
Chile
Hungary
Mexico
Cz.Rep.
Poland
India
Brazil
Housing Credit Total Credit
Sources: Global Property Guide, Central Banks Elaborated by: MF/STN
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4,4
10,8
19,0
28,9 28,6
32,8
22,5
16,6
10,1
18,115,1
18,8
34,6
45,1
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Foreign Direct InvestmentsForeign Direct InvestmentsForeign Direct InvestmentsForeign Direct Investments(US$ bi)(US$ bi)(US$ bi)(US$ bi)
Source: BCB
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Trade to GDP RatioTrade to GDP RatioTrade to GDP RatioTrade to GDP Ratio(2005(2005(2005(2005----2007)2007)2007)2007)
Source: WTO (October 2008) Elaborated by: MF/SPE
25,8
0
20
40
60
80
100
120
Brazil
USA
Japan
Colom
bia
Argentina
Australia
India
Peru
Turkey
Russia
France
Italy
UK
Spain
Uruguay
M
exico
Ecuador
Bolivia
Portugal
China
Canada
Chile
Germ
any
South
Korea
Philippines
Switzerland
Paraguay
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EntrepreneursEntrepreneursEntrepreneursEntrepreneursConfidenceConfidenceConfidenceConfidence
Source: FGV Elaborated by: MF/SPE
INDUSTRY CONFIDENCE INDEX
70
80
90
100
110
120
130
Feb
07
May
07
Aug
07
Nov
07
Feb
08
May
08
Aug
08
Nov
08
Feb
09
ici - seasonally adjusted