Economic challenges and opportunities in Brazil
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Economic challenges and opportunities in Brazil

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Overview of Brazilian economy and the role of industry.

Overview of Brazilian economy and the role of industry.

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    Economic challenges and opportunities in Brazil Economic challenges and opportunities in Brazil Presentation Transcript

    • Economic challenges and opportunities in Brazil Overview of Brazilian economy and the role of industry Brazil Day – Colorado Robson Braga de Andrade National Confederation of Industry (CNI) - Brazil
    • Main messages Brazil is growing, but it is still under its potential Inequality and poverty have been decreasing Huge domestic market potential Manufacturing is under stress Structural changes and trade Competitiveness and innovation The “China effect” Great opportunity to grow more and better
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 3
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 4
    • Recent economic trends Economic recovery is under way GDP variation over the previous quarter – S.A. 0.83 1.47 0.77 0.63 0.39 0.37 0.22 0.18 IV I 0.11 -0.07 I II III 2011 II III 2012 IV I II 2013 Source: IBGE 5
    • Recent economic trends Consumption gives space to investment in GDP growth Household consumption and investment (GFCF) Quarter over quarter variation (%) – S.A. 4.74 3.59 1.55 1.15 0.88 0.87 0.78 0.26 -0.03 -2.36 I -1.90 II -1.44 III 2012 Household consumption Source: IBGE IV I Gross fixed capital formation II 2013
    • Recent economic trends Poverty rate is decreasing Cruzado I Price freeze “Bolsa família” benefited more than 14 million households in 2012 “Real” Plan Cruzado II hiperinflation Increase in “Bolsa Família” program and economic growth Source: IBGE
    • Recent economic trends Unemployment rate fell down even with global crisis Brazilian economy is working close to natural unemployment rate Source: IBGE
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 9
    • Industry role Brazilian industry profile 26% of GDP in 2012 45% of tax burden in 2009 24% of labor market in 2012 24% of labor income in 2012 51% of exports in 2012 Source: IBGE, RAIS/MTE, FIESP and SECEX/MDIC
    • Industry role Brazil has a diversified and competitive industry •Number one producer of regional jet planes • 3rd largest footwear producer • 3rd largest soft drinks producer • 5th largest rubber producer • 3th largest pulp producer • 6th largest automobile producer • 9th largest steel producer
    • Industry role Technology-intensive industrial exports 36% of Brazilian industrial exports are: • high-technology products (aircraft, pharmaceuticals and IT) • medium-technology-intensive products (electric and mechanical materials, automobiles and chemicals)
    • Industry role China effect? US$ Billion (FOB) – 2009-2011 average 45 41 34 28 27 22 18 15 European Union China Exports Source: SECEX/MDIC EUA Imports Argentina
    • Industry role A different story for manufacturing trade US$ Billion (FOB) – 2009-2012 average - manufactured 39 26 26 16 16 12 11 2 European Union China Exports Source: SECEX/MDIC EUA Imports Argentina
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 15
    • Investment opportunities Brazil is a very attractive market • Brazil is a dynamic and competitive economy • We are the biggest Latin American economy with huge and growing domestic market • There are innumerous investment opportunities that may be done directly or in terms of joint ventures with Brazilian firms • The size of the Brazilian market is attractive to investments towards mass consumption, such as domestic appliances •Economies of scale allow that Brazil may be used as an export platform to reach other markets •Agribusiness is a dynamic sector, where Brazil is highly competitive
    • Investment opportunities Environmental features Brazilian Amazon biodiversity is an asset of sustainable opportunities • The use of its natural resources in a great variety of the industry’s supply chain such as timber, mining cosmetics, perfumes, food and many others... • Researches resulting in new applications of pharmaceuticals, cosmetics, phytotherapy and nanotechnology • Ongoing possibilities with the clean Development Mechanisms (CDM/FCCC) Brazil holds 20% of the world’s biodiversity
    • Investment opportunities Energy • The share of renewable resource in the global energy matrix is 14%. In Brazil the percentage is 45% • 85% of the Brazilian installed capacity is derived from hydroelectric power plants. The remaining 15% is derived from thermoelectric plants The Brazilian hydroelectric potential is 260 thousand Megawatts, 170 thousand of which are yet to be exploited
    • Investment opportunities Specialization in ethanol • Largest producer of sugarcane ethanol • World’s largest exporter • Ethanol fuel consumption has a 50% market share of the gasoline-powered fleet in Brazil Brazil is focused on creating a global, standardized and free-trade market
    • Investment opportunities Pre-salt discovery • Until 2015, Petrobras will drilling 67 exploratory wells in the Campos Basin • Four more oil refineries will be operating in the next few years
    • Investments for the next four years US$ 1,03 trillion In investments already anounced by the industry in the period from 2013 to 2016 Source: BNDES
    • Investments by sector for the next four years Sector Estimates (US$ billion) Oil e gas Aeronautics 10 Steel 28 Chemistry 30 Automobiles 63 Electronics 28 Pulp and paper 30 Textile 14 Others industrial 368 Manufacturing 977 Mining 57 Total Source: BNDES 405 1.033
    • World Cup 2014 and Olympics Games 2016 • Construction 12 arenas for the World Cup 2014 already added up US$ 1,4 billion in signed contracts • Investments in 13 airports add up US$ 4 billion • There are 7 ports that are constructed or developed with modern touristic terminals – investments estimated: US$ 563 million • The world Cup itself will aggregate US$ 108 billion at Brazilian GDP through 2019, which means plus 0,4 percentage points in GDP per year
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 24
    • Challenges Challenges to increase competitiveness Tax Labor Infrastructure Education Innovation 25
    • Challenges Challenges: development opportunities Infrastructure Pharmaceuticals Agribusiness Aerospace Bioeconomy Energy
    • Agenda Agenda  Recent economic trends  Industry role  Investment opportunities  Challenges  Strategic Map of Industry 27
    • Strategic Map of Industry COMPETITIVENESS WITH SUSTAINABILITY MACRO-ECONOMIC ENVIRONMENT INNOVATION AND PRODUCTIVITY • Stability and predictability • Institutional environment and incentives for innovation • Technological consult. services • Business management • Global value chains • Sectoral policies LABOR RELATIONS • Management of public spending • Modernization of labor relations • Labor costs Source: CNI FINANCING • Regional development • Bank credit • Stock market • Micro, small and medium enterprises LEGAL SECURITY AND RED TAPE • INFRASTRUCTURE • Transportation logistics • Energy • Telecommunications • Sanitation EDUCATION • Access to markets • Internationalization • Investment rate GOVERNMENT EFFICIENCY MARKET DEVELOPMENT • Basic education Predictability of rules • Court efficiency • Red Tape reduction • Environmental licensing TAXATION • Tax load • Elimination of burdens on investments and exports • Simplification and transparency • Technical and vocational education and training (TVET) • Training of engineers and technologists 28
    • Thank you For more information about Brazilian industry go to CNI website www.portaldaindustria.com.br