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Presentation Ivan Van de Cloot

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Presentation Ivan Van de Cloot

  1. 1. Brazil: an economic superpower Ivan Van de Cloot Chief Economist Itinera Institute
  2. 2. <ul><li>Independent “Think-tank” </li></ul><ul><li>Based on facts and figures- international comparisons </li></ul><ul><li>Long term </li></ul>” “ To show, to defend and to build roads for policy reform towards sustained economic growth and social protection, for Belgium and its regions.
  3. 3. Summary <ul><ul><li>Economic and social progress </li></ul></ul><ul><ul><li>2. A sustainable economy? </li></ul></ul><ul><ul><li>3. The future </li></ul></ul>
  4. 4. Since 2003 some 20m Brazilians have emerged from poverty and joined the market economy . Source : The Economist, Lula’s Legacy, Sept 30th 2010
  5. 5. Social protection delivers lower poverty
  6. 6. Population increasingly urban Source : The Economist, Lula’s Legacy, Sept 30th 2010
  7. 7. Growth at the bottom Source : Centre for Social Policies, Rise of the New Middle Class
  8. 8. Analfabetism dropping Source : IBGE, Pesquisa Nacional por Amostra de Domicílios 1992, 1995, 2001-2009
  9. 9. Life expectancy at birth, male Source : Worldbank
  10. 10. Summary <ul><ul><li>Economic and s ocial progress </li></ul></ul><ul><ul><li>2. A sustainable economy </li></ul></ul><ul><ul><li>3. The future </li></ul></ul>
  11. 11. Age pyramid which is much younger than Europe’s
  12. 12. Ageing in advanced economies took three times as long as it will in Brazil
  13. 13. Vital for democracy: middle class Source : Centre for Social Policies, Rise of the New Middle Class
  14. 14. Financial stability? <ul><ul><li>1. How to cope with massive capital inflows? </li></ul></ul><ul><ul><li>=direct investment but also portfolio investment </li></ul></ul><ul><ul><li>2. Abundant global liquidity </li></ul></ul><ul><ul><li>3. Improvement in regulatory quality & financial market deepening </li></ul></ul><ul><ul><li>4. Subsidised credit by national develeopment bank (BNDES) </li></ul></ul><ul><ul><li>5. Household debt is climbing </li></ul></ul><ul><ul><li>=for now asset price bubble remains contained </li></ul></ul>
  15. 15. Exchange rate appreciation <ul><ul><li>1. Massive capital inflows =but also positive productivity differential with trading partners </li></ul></ul><ul><ul><li>2. Oil production or Dutch disease </li></ul></ul><ul><ul><li>3. Studies estimate overvaluation at 3- 20% </li></ul></ul><ul><ul><li>4. Policy: tax on capital inflows (IOF) to discourage speculative bubble </li></ul></ul><ul><ul><li>=FDI versus portfolio investment </li></ul></ul><ul><ul><li>5. Accumulation of international reserves </li></ul></ul><ul><ul><li>=costly policy </li></ul></ul>
  16. 16. Investment rate to be boosted by Plano Brasil Maior 2014 Source : World Bank
  17. 17. Reforms for Brazil and Belgium <ul><ul><li>Simplification of the tax system </li></ul></ul><ul><ul><li>=Fragmentation, complexity and changing provisions </li></ul></ul><ul><ul><li>2. Increase public saving in order to fund investment </li></ul></ul>
  18. 18. Potential to open Brazilian market more <ul><ul><li>High level of tariff protection </li></ul></ul><ul><ul><li>=non-agricultural goods at 14.1% </li></ul></ul><ul><ul><li>Product market regulation, preferential treatment domestic </li></ul></ul>
  19. 19. Net debt as % of GDP Source: National sources, World Bank, OECD, IMF, UBS as at December 2010 Emerging countries= not over-indebted
  20. 20. A lot of reserves
  21. 21. And steep climbing reserves
  22. 22. Total reserves incl gold (mio USD) Source : Worldbank, 2011
  23. 23. Annual GDP growth Emerging countries suffered but recovered
  24. 24. Growth would be sustained in coming years
  25. 25. Summary <ul><ul><li>Economic and Social progress </li></ul></ul><ul><ul><li>A sustainable economy? </li></ul></ul><ul><ul><li>3. The future </li></ul></ul>
  26. 26. Proven oil reserves Source : ANP Agência Nacional do Petróleo, Gás Natural e Biocombustíveis , Annual Report 2011
  27. 27. Oil as manna from heaven?
  28. 28. Real opportunities: but challenging to exploit Source : The Economist, Nov 5th 2011 <ul><li>The Lula well is deeper than BP’s Macondo </li></ul>
  29. 29. Untapped reserves (grey areas)
  30. 30. Growing number of multinationals
  31. 31. Labour Force 15-64 y Source: United Nations, as at December 2010 Favorable demographics
  32. 32. Source: IMF IFS, Central Bank Data, BIS, Bank of America Merrill Lynch Global Research estimates. Note: Most data from end 2009 and also includes some estimates from BofA ML Global Res. Mortgage penetration as % GDP A lot of growth potential
  33. 33. Cars per 1000 people Job creation Source: Ministry of Labor, Brazil; data as of 19 January 2011. Morgan Stanley, Haver as of 28 October 2010 Source: Credit Suisse, Datastream, March 2010 A lot of potential for domestic consumption
  34. 34. Huge investments planned (Programa de acelaracao do crescimento)
  35. 35. Private sector involvement
  36. 36. Potential output growth
  37. 37. The plant bottle 22.5% of the bottle’s PET is plant- based, made from brazilian ethanol Coca Cola aims to sell by end 2011 more than 5 billion bottles in 20 countries
  38. 38. FEB- P.A. De Smedt SHARE OF G-7 AND E-7 (PPP) IN THE GLOBAL GDP G7 countries E7 countries
  39. 39. Questions

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