panorama macroeconômico brasileiro

Mr.Antonio Fernando G.Bessa Deputy Director

DEREX Department of Trade and Foreign Affairs

Brazilian Economy Overview

2. Economic Highlights

3. Foreign Trade

4. Investments

DEREX | Department of Trade and Foreign Affairs

1. Institutional .

Industry

FIESP Federation of Industries

of State of Sao Paulo

Represents 131 sector business associations which stands for about 150,000 state and national firms

CIESP Center of Industries of State of Sao Paulo

43 regional offices throughout the state which represents about 10,000 associated firms

These entities work together in defense of the industry, providing services and support to their associated institutions and firms.


IRS Roberto Simonsen

Institute

Think tank specialized in industrial issues. It’s also responsible for the coordination of Superior Council

Education

SESI Industrial Social

Service

Provides industrial employee’s families

with social services, mainly education,

culture, sports and health

SENAI Industrial Technical Schools

Promotes professional education through

technical schools providing qualified

workforce to the industry

220 basic schools and more than 273,000

children, youth, adults and elderly people

157 technical schools and more than 1 million

students registrations per year



FIESP Structure

PRESIDENCY

SUPERIOR COUNCILS Guidelines for departments

DEPARTMENTS

Trade and Foreign Affairs

Agribusiness

Union and Labor Issues

Competitiveness and Technology

Infrastructure and Energy

Regional Action

Environment

Small and Medium Companies

Research and Economic Studies

Legal Division

Defense Industry

Construction Industry

1.015

379

700

Brazil São PauloState

Fiesp

100% 37% 69%

Sao Paulo State and FIESP’s representativeness in the Brazilian Economy

Main Industrial Sectors Represented by FIESP

Aircraft

Food

Fuels

Oil Refinery

Electric Energy

Ethanol

Fertilizer and Animal Food

Machinery

Metallurgy

Paper and Cellulose

Chemical Products

Oil and Gas

Textiles and Apparel

Vehicles and auto parts

Industrial GDP (US$ Billions)

33% of Total GDP (*) US$ 709 bi

24% of Total Exports (**) US$ 59.9 bi

57% of Brazil´s Industrialized Exports (**) US$ 53.3 bi

SP State Share in Brazil’s GDP and Exports

(*)2010, latest effective figure available (**)2012

Sao Paulo State and FIESP’s representativeness in Brazilian Economy

2. Economic Highlights

3. Foreign Trade

4. Investments

5.7

3.2

4.0

6.1

5.2

-0.3

7.5

2.7 0.

9

3.0

3.5

3.5

-2.0

0.0

2.0

4.0

6.0

8.0

10.020

04

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

2014

*

2015

*

GDP average growth (%YoY)

Average 3.5%Average 4.0%

Brazil´s GDP Growth for the next 3 years is projected to be around 3,6%.


Note: (*) Forecast: BCB/Focus, Apr, 12th, 2013

Source: IBGE Compilation : FIESP

118.1

131.0

103.8

124.3

131.1128.8

125.5

feb-

07

jun

-07

oct

-07

feb-

08

jun

-08

oct

-08

feb-

09

jun

-09

oct

-09

feb-

10

jun

-10

oct

-10

feb-

11

jun

-11

oct

-11

feb-

12

jun

-12

oct

-12

feb-

13

Industrial Production Index (02=100)

seasonally adjusted

Despite the incentives adopted by the Government, the industrial production fell 2,7% in 2012



In 2012, vehicle production fell 1.8%. Production of cars grew with IPI reduction, but the truck’s production decreased…


Source: ANFAVEA Compilation : FIESP

-4%

0%

4%

8%

12%

16%

0

1,000

2,000

3,000

4,000

2006 2007 2008 2009 2010 2011 2012

Production of vehicles Vehicles (1000 units) % YoY

The new light vehicle sales had been boosted by incentives granted by the Government in 2012

Source: ANFAVEA Compilation : FIESP


-60%

-40%

-20%

0%

20%

40%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2006 2007 2008 2009 2010 2011 2012

Production of vehicles by categoryVehicles production Light vehicles Trucks Buses

1,000 units % YoY

Retail sales growth remains strong with an increase of 8.4% in 2012

Source: BCB Compilation : FIESP


72.576.6

82.2

92.4

98.7

106.1110.2

feb-

07

jun

-07

oct

-07

feb-

08

jun

-08

oct

-08

feb-

09

jun

-09

oct

-09

feb-

10

jun

-10

oct

-10

feb-

11

jun

-11

oct

-11

feb-

12

jun

-12

oct

-12

feb-

13

Retail Sales Index (11=100)

seasonally adjusted

Strong demand versus flat supply...

Note: (¹) Index number, seasonally adjusted

Source: IBGE, Macrodados Compilation : FIESP


80.00

100.00

120.00

140.00

160.00

feb-

07

jun

-07

oct

-07

feb-

08

jun

-08

oct

-08

feb-

09

jun

-09

oct

-09

feb-

10

jun

-10

oct

-10

feb-

11

jun

-11

oct

-11

feb-

12

jun

-12

oct

-12

feb-

13

Industrial Production versus Retail Sales (jan/07=100)¹

Industrial Production

Retail Sales

Industrial

production

fell 2.7% in

2012

Retail sales

increased

8.4% in 2012

...consistent credit expansion in Brazil, but...

Note: (*) Preliminary data



35,0

40,0

45,0

50,0

55,0

0

500

1.000

1.500

2.000

2.500

2008 2009 2010 2011 2012*

Credit Expansion

Loans Loans % GDP

USD bn %

credit over GDP is still low compared to other economies

Source: World Bank Compilation : FIESP


206%

194%

187%

173%

135%

122%

116%

71%

65%

61%

55%

55%

51%

26%

17%

Credit (% of GDP) - Selected Economies

The Brazilian tax burden is very high. Partners with similar ratio have a per capita GDP more than three times higher


Source: IBGE, IMF, IMD, RFB Compilation: DECOMTEC/FIESP

Tax burden x per capita GDP

Tax

bu

rden

(%

of

GD

P)

Per capita GDP (PPP)

In April 2012 public banks started to reduce lending rate boosting competition. This brought pressure on lending spreads, which began a declining trend.



5

10

15

20

25

30

35

40

feb-11 may-11 aug-11 nov-11 feb-12 may-12 aug-12 nov-12 feb-13

Financial System Spread

Total Individuals Companies

Public banks lending rate reduction

Brazilian Monetary Authority promoted an aggressive monetary expansion…

Note: The Brazilian Central Bank increased the SELIC rate to 7.50% on April, 18th, 2013

Source: BCB, IBGE Compilation : FIESP


10.50%

7.25%

6.2

%

5.2

%

4.9

% 5.2

%

5.5

% 5.8

% 6.3

%

6.5

9%

7%

8%

9%

10%

11%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

jan-12 mar-12 may-12 jul-12 sep-12 nov-12 jan-13 mar-13

Monetary Policy

Consumer prices (IPCA): YoY Policy Rate (SELIC)

Inflation remains within the bounds set by the government

Source: Brazilian Central Bank and the IMF Compilation: FIESP


8.6%

5.8%

7.4%

11.9

%

9.0%

7.4%

5.6%

3.1%

4.4%

5.8%

4.2%

5.8%

6.3%

5.7%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Inflation (IPCA YoY)

IPCA inflationTargetUpper/lower bounds

…several stimulus policies are in progress in response to the ongoing international crisis environment.

Stimulus policy


1) Expansive monetary policy 2) Tax exemption for dynamic sectors (IPI) 3) Fiscal and credit stimulus for Industry “Brasil Maior” 4) “PAC equipamentos”: anticipation of government purchases 5) Reduction in energy costs

Automobile White line Building material

For consumers of medium and

large (in the case of industries), the value can reach

32%.

Unemployment down in Brazil...



5.5

6.25.9

5.4 5.4

4.6

5.4

4.0

5.0

6.0

7.0

jan-12 mar-12 may-12 jul-12 sep-12 nov-12 jan-13

Unemployment Rate - seasonally adjusted (% p.m)

Source: IBGE Development: FIESP


Brazilian population is ageing. More than 47% is above 30 years old.

7.03

7.62

8.73

8.56

8.63

8.46

14.49

12.01

8.74

5.26

3.89

6.78

7.34

8.44

8.43

8.61

8.64

15.15

12.83

9.68

6.10

5.34

0-4 years old

5-9 years old

10-14 years old

15-19 years old

20-24 years old

25-29 years old

30-39 years old

40-49 years old

50-59 years old

60-69 years old

70-over

Demographic composition (Million persons)

Women Men

Around 30 million people have entered the middle class from 2003 to 2009.


Note: (*) Forecast: CPS/FGV. Last effective data: 2009

Source: CPS/FGV Compilation : FIESP

Class A/B more than US$ 2,790; Class C between US$ 648 – 2,790; Class D: between US$ 467 – 648. Class E: up to US$ 467; Note: monthly per capita income per households and class, in prices of 2009.

Social Class Mobility

(% of total population and millions of people)

2003 2009 2014*

28%

27%

37%

8% 13

49

47

66

15%

24%

50%

11%

29

44

95

20

8%

20%

56%

16% Class A/ B

Class C

Class D

Class E16

40

113

31

3. Foreign Trade

4. Investments


Trade flow follows a positive trend. In 2011, exports and imports reached highest historical level.

Forecast: FIESP *YTD until march


0

50

100

150

200

250

300

2006 2007 2008 2009 2010 2011 2012 2013*

Brazilian Trade Balance

Exports Imports BalanceUSD bn USD bn

Source: MDIC Compilation : FIESP

Since 2008, commodities¹ represents the most part of Brazilian exports


Note: (¹) Commodities represents primary products and semimanufactured goods


20%

30%

40%

50%

60%

70%

80%

2006 2007 2008 2009 2010 2011 2012

Brazilian exports composition (% of total)

Commodities Non-Commodities

Asia is Brazil´s number 1 trade partner...



Trade Balance: share by trade partner (2012)

United States European Union Latin America Asia Others

Brazilian

ExportsUSD bn

∆ %(2012 x 2011)

Brazilian

ImportsUSD mn

∆ %(2012 x 2011)

1º China 41,2 -7,0% China 34,2 4,4%

2º USA 26,7 3,5% USA 32,4 -4,7%

3º Argentina 18,0 -20,7% Argentina 16,4 -2,7%

4º Netherlands* 15,0 10,3% Germany 14,2 -6,6%

5º Japan 8,0 -16,0% South Korea 9,1 -9,9%

Trade balance by destinations and origins (2012)

Top 5 destinations and origins of Brazilian exports and imports.

Note: (*) Main logistical hub of Europe



Brazilian

ExportsUSD mn

Brazilian

ImportsUSD mn

Iron ores

and concentrates30.989

Petroleum, crude 20.306 Petroleum, crude 13.406

Soybeans,

whether or not broken17.455 Natural gas 3.336

Chicken 6.732Coal, whether or powder,

unagglomerated3.006

Soybean bran 6.595 Wheat grains 1.757

Rubber, in natura 662

Main BASIC products (2012)

Main primary products exports and imports...



Brazilian

ExportsUSD mn

Brazilian

ImportsUSD mn

Airplanes 4.747

Spare parts for vehicles 3.778 Spare parts for vehicles 6.771

Passenger car 3.725 Passenger car 9.567

Refined sugar 2.814 Fuel oils 6.712

Ethyl alcohol 2.186 Medicines 6.114

Electronic integrated

circuits4.249

Main MANUFACTURED products (2012)

...main manufactured products exports and imports.



4. Investments


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2008 2009 2010 2011 2012 2013

Investment Inflow (USD mn)

International Reserves Foreign Direct Investiment

Forecast* BCB/Focus US$ 60 bn

Consistent expansion of Foreign Direct Investment and International Reserves. FDI increased 110% from 2009 to 2012 in Brazil...

Note: (*) Forecast: BCB/Focus, Apr, 12th, 2013



TOP 10 origins of direct investment in Brazil


Source: BCB Development: FIESP

FDI in Brazil: share by country (2012)

Country US$ Mil ShareUnited States 12,310 20.3%

Netherlands* 12,213 20.2%

Luxembourg 5,965 9.9%

Switzerland 4,333 7.2%

Spain 2,523 4.2%

France 2,155 3.6%

Chile 2,013 3.3%

United Kingdom 1,953 3.2%

Canada 1,950 3.2%

Japan 1,471 2.4%

* Netherlands is an investment hub

Brazil leads agribusiness production and exports globally for several products …

Source: USDA (apr/2013) and DEAGRO – FIESP Compilation : FIESP


1st 1st 1st 1st 2nd 1st 2nd 4th

81% 45% 35% 28% 19% 31% 22% 9%

1st 1st 3rd 1st 2nd 2nd 3rd 4th

57% 22% 20% 37% 17% 24% 9% 3%

Exp

ort

s P

rod

uct

ion

Brazil | Leadership in World Ranking (2012/13)

Orange Juice Sugar Broiler Coffee Beef Soy Complex Corn Pork


Note: (*) Estimative

Source: Conab (Apr/2013) and DEAGRO - FIESP. Compilation : FIESP

1.5 3.5

37%

217%

Area (million ha):

Production (million tons):

3852

58

184

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12

/13

*

Productivity (tons/ha): + 127%

Brazil | Production of grains

Grains: cotton, peanuts, rice, oats, canola, rye, barley, beans, sunflower, castor beans, corn, soybeans, sorghum, wheat and triticale.

Brazil stands out for the high share of renewable energy in its energy matrix than the BRICS and G7 countries...


2.8

3.2

3.3

5.4

7.7

8.7

9.7

10.0

11.9

16.9

26.1

45.8

0 5 10 15 20 25 30 35 40 45 50

Russia

United Kingdom

Japan

United States

France

Germany

Italy

South Africa

China

Canada

India

Brazil

Renewable Energy Souces (% of energy supply)

Source: Brazilian Ministry of Finance, Apr 2012 Economic Outlook Report.

Compilation : FIESP

Fifteen biggest Projects in the World’s Energy Sector* (USD bn)


2.5

3.0

4.2

6.3

6.3

6.5

6.6

6.8

8.2

10.0

10.2

12.0

12.6

16.0

18.2

Brazil

Colombia

India

Brazil

China

Canada

Canada

China

Brazil

Brazil

China

USA

Brazil

Brazil

China

Pescadero Hydroelectric

Angra 3 Nuclear Station

Jirau Hydroelectric (RO)

Mundra Thermoelectric

Xiangjiaba Hydroelectric

Romaine Hydroelectric

Pace River Hydroelectric

Xiluodu Hydroelectric

Santo Antônio Hydroelectric (RO)

Yangjiang Nuclear Station

Green Power Express Transmission

Belo Monte Hydroelectric (PA)

São Luiz do Tapajós Hydroelectric (PA)

Jiuquan Eolic Platform

Teles Pires Hydroelectric (MT-PA)

Note: (*) Final stage or in progress

Source: Brazilian Ministry of Finance, Apr 2012 Economic Outlook Report.

Compilation : FIESP

panorama macroeconômico brasileiro

Business

foreign affairs source

foreign affairs note

foreign affairs 2

foreign affairs 1

seasonally adjusted

brazilian ministry

capita gdp

fiesps representativeness