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Brazil in 2002
60% of total sovereign debt denominated in dollars
IMF debtor country High public debt to GDP ratio: 60.6% Policy rate at 25% Rising inflation
High country risk premiums and sovereign debt rated as speculative grade
Unemployment rate at 14%
Jul 03: 0%
Decrease in the public debt As a result: decrease in country risk premiums
3
Costs
6% drop in domestic demand in the first semester 15% of industrial production was redirected to exports
Trade surplus
Current account reversal: from -6% to +2% of GDP
50
45 40 35 30 02
48.2
47.0
45.1
42.7 42.8 40.8 39.5
38.4
38.0
37.0
36.5
03 04 05
06 07 Aug 08 08
09 10 11
12 13 14
5
Aug 08 205.1
USD billion
B+ 1Q03 165.2
S&P: Fitch:
BBBBBB()
BB-
Moodys: Baa3
()
4Q04 135.7
BB
BB+ -49.5
Macroeconomic Responsibility
Virtuous Circle:
responsible policies
macroeconomic stability lower risk premiums more credibility stronger growth
greater efficiency
expectations anchored lower interest on public debt decline in public debt to GDP ratio
8
resulted in:
capacity to absorb internal and external shocks macroeconomic and financial stability
sustainable growth
investment growth credit and capital market development
9
2000
1810 1620 1240 basis points
10
1430
130
120 110 100 90 1Q 00 1Q 01 1Q 02 1Q 03 1Q 04
1050
860 670 480 290 100
1Q 05
1Q 06
1Q 07
1Q 08
1Q 09
3Q 10
50
45
40
30 25 20 15 10 5
% of GDP
35
R$ billion
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Stocks Commercial papers Others
12
40
USD billion
30 2002-06 15.7
20
10
0 02 03 04 05 06 07 08 09 10 11 12 13 14
13
FDI 32.8%
FDI 36.8%
14
Exports
2010-14 238.2 250 200 USD billion 150 100
50
0 80
1980-89 25.5
85
90
95
00
05
10
14
15
Exports
diversification of trade partners 35 30 25 % 20 15 10.3 22.2 23.3 17.9 1990 2002
26.3
2009
10
5
USA
Europe
Latin America
Asia
other
16
10
8 6 4 2 IPCA
105 100 95
Jan 03
Jan 04
Jan 05
Jan 06
Jan 07
Jan 08
Jan 09
Jul 10
Social Mobility
200 13 20
31
150 66
100
+44.1%
95
+19.0%
113
47
50 49 0 2003
44
29 2009
40 16
2014*
18
1564.6
1655.1
1155.3
670.4
437.9
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: MTE/CAGED 19
Unemployment in Brazil
seasonally adjusted 13 12
11
%
10
9 8 7 Feb 03 Feb 04 Feb 05 Feb 06 Feb 07 Feb 08 Feb 09 Jul 10
20
6.96
Source: IBGE
Unemployment Rate
Africa do Sul Espanha Litunia Crocia Irlanda Colmbia Grcia Polnia Turquia Hungria ndia Portugal Zona do Euro Frana Estados Unidos Blgica Venezuela Itlia Chile Sucia Canad Argentina Reino Unido Alemanha Brasil
25.3 20.1
18.3
16.4 13.8 13.3 11.7 11.4 11 11 10.7 10.6 10 9.7 9.6 8.9 8.7 8.42 8.3 8 8 7.9 7.8. 7.6 7.0
Source: Bloomberg
21
forecast
17.45 16.41
14.5
14.0 13.5 13.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Central Bank of Brazil
22
Gini Index
0.535
0.532
0.50
98 99 01 02 03 04 05 06 07 08 09
23
Source: IBGE/PNAD
2010-2014 forecast for the current trend 36.0 million more will enter the middle class 14.5 million more will come out of poverty Family Grant Program (Bolsa Famlia): reduction of people in extreme poverty from 12% to the 4% level
Source: FGV-CPS
24
Poverty
30
28.1 25.4
% of population
25 22.8 20 19.3
15
10
2003
Source: CPS/FGV
2004
2005
2006
2007
2008
2009
25
internet access
26.8 22.3
25
% 20
24.1
20.3 17
15.2
15 10 5 0 03
Source: IBGE/PNAD
16.5 12.3
18.7 13.8
11.4
04
05
06
07
08
09
26
8
6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (jun) Jun
Source: Central Bank of Brazil
Basel I (8%)
27
9.4
8.9
7
6 5 4 3
2
1 0
0.9
1.5 0.3
0.7
G-20
Brazil
28
Automobile
Electric/Electronics Pulp and Paper Total
Source: BNDES
23
15 17 314
32
21 19 549
37.8
39.0 10.6 74.8
30
Growth
% 45.2 2.1 76.5
Railways
Highways Ports Total
Source: BNDES
19
21 5 199
56
36 15 310
195.3
73.0 217.9 55.6
31
millions of hectares
Brazil*
India
Indonesia
Argentina
European Union
Source: FAO
Congo D. R.
Colombia
32
Angola
China
Sudan
Australia
Canada
Nigeria
USA
Russia
Level of Domestic Saving Quality of Public Expenditures Investment Rate and Infra-Structure Education Review and Simplification of the Tax System Legal Environment more favorable to Business Incentive to Long Term Investment
33
GDP Growth
annual real growth rate
7 6 5 4
7.3%
5.1%
(2006-2008)
3
2 1 0 -1
3.3%
(2003-2005)
2.1%
(1999-2002)
-0.2%
99
00
01
02
03
04
05
06
07
08
09
10
34