Brazil has caught popular imagination  … is the country of the future really taking off ?
Brazil 2009 GDP                                      US$2,080,490 mil                                      Venezuela 6.3x ...
..and it’s all clustered in the southeast
Growth has finally reached emerging market rates.
2nd largest FDI destination after China. Why?
Exports by company (2009, US$mil)                       Imports by company (2009, US$mil)                               12...
A little bit of economic history that matters…        It started with sugar, then coffee, then food…
Let’s spend it on building a new              capital in the desert. And airlift                      every brick there.  ...
1942               Real            1.000      Let’s start1942               Cruzeiro        CR1.00     Divide by 10001967 ...
Inflation is seared into living memory…               savings is low,     which leads to ‘bad’ balance sheets… high extern...
Industrial policy is inward looking…And is shown up in tax, trade agreements,             manpower etc
92% companies face difficulties in hiring. 81           % can’t find qualified professionals.   46                      % ...
+ services                                   +            tax 2-5%                               domestic                 ...
80% R&D is publicly funded. Aspiration to achieve Korea’s 20-80 ratio.Curious fact: ‘67 IMF-directed Korea came to Brazil ...
7% 65%       unemployment, hard to find qualified people.                     expansion of domestic credit                ...
…but social transfers are creating a middle class, and as long as the  commodity boom continues, this new middle class wil...
Why China grows … and Brazil doesn’t             Follow the TFP
What makes Brazil Brazil?     Or why is the Brazil story so hot?… Oops, it’s inflation.. Hot money chasing 11% interest.
What does the future hold for Brazil?
Excitement over presalt findings that will vault Brazil  into major energy exporter (to emerging Asia) …
Source: PWC Future of World Trade 2030                 … South-South (China) trade will boom….
40          out of 81 anti-dumping measures taken by Brazil are against Chinese products.Brazil’s energy and commodities s...
Blackout along Paulista Ave, Sao Paulo and Latam’s financial center tests Brazil’s readiness for World Cup and Olympic Gam...
Paraisópolis, São Paulo, Brazil.No mass job creation, no boom to fuel social transfers,            Europe-India schism liv...
.. It might end up with debris of energy boom and  bust, a repeat of coffee’s 1930s boom and bust
Upcoming SlideShare
Loading in …5
×

Brazil country of the future

975 views

Published on

Some thoughts I had after a quic

Published in: Travel, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
975
On SlideShare
0
From Embeds
0
Number of Embeds
11
Actions
Shares
0
Downloads
17
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Brazil country of the future

  1. 1. Brazil has caught popular imagination … is the country of the future really taking off ?
  2. 2. Brazil 2009 GDP US$2,080,490 mil Venezuela 6.3x smaller Argentina 6.8x smaller Colombia 9.0x smallerHow big is Brazil’s economy? ..Brazil is the big game in Latin America
  3. 3. ..and it’s all clustered in the southeast
  4. 4. Growth has finally reached emerging market rates.
  5. 5. 2nd largest FDI destination after China. Why?
  6. 6. Exports by company (2009, US$mil) Imports by company (2009, US$mil) 12,307 12,555 2,580 10,826 2,105 Alberto Pasqualini - REFAP 4,053 414 4,344 1320 2,770 967 1,873 1478 1,461 2,336 153 1,234 1,234 1,479 1,313 Source: Secretaria do Comercio Exterior Brazil is mainly an extractive economy.Petrobras (oil), Vale (iron ore) are among the companies that caught the emerging market commodity boom.
  7. 7. A little bit of economic history that matters… It started with sugar, then coffee, then food…
  8. 8. Let’s spend it on building a new capital in the desert. And airlift every brick there. 7% annual avg Make money from WWII 15 times in 40 years 8.7 4.3% annual avg 5.4 times in 40 years 7.4 2.7% annual avg 2 times in 30 years 6.2 6.0 4.4 4.3 4.6 4.5 3.4 2.7 1.7 1901-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-00 2001-10Three lost decades … is there a second chance?
  9. 9. 1942 Real 1.000 Let’s start1942 Cruzeiro CR1.00 Divide by 10001967 Cruzeiro Novo NCr1.00 Divide by 10001970 Cruzeiro Cr 1.00 No change1986 Cruzado Cz 1.00 Divide by 10001989 Cruzado Novo NCz 1.00 Divide by 10001990 Cruzeiro Cr 1.00 No change1993 Cruzeiro Real Cr 1.00 Divide by 10001994 Real R 1.00 Divide by 2750So far, so good. 2,750,000,000,000,000% devaluation! Stabilized in 1994 real plan.
  10. 10. Inflation is seared into living memory… savings is low, which leads to ‘bad’ balance sheets… high external deficits, high public deficits, excessive dependence on leverage to drive growth…
  11. 11. Industrial policy is inward looking…And is shown up in tax, trade agreements, manpower etc
  12. 12. 92% companies face difficulties in hiring. 81 % can’t find qualified professionals. 46 % can’t find technicians…. “Can’t find welders for building stadiums!” 80 % additional legal costs over salary benefits (13th salary, 30 days vacation + allowance..) 50 % retirement fund, vacation, 13th salary etc when firing Hiring is hard, firing is also hard…
  13. 13. + services + tax 2-5% domestic state tax Ovs 7-33% remittce Social 10% Security + + financial 7.6-3% manufact transactn Others Profit ured tax y% x% sharing Social product + WH tax 1.65- contribut x% 15-25% 0.65% on income + 9-15% surchage Export 10% duty Import Corporate 0-30% duty 15% 0-35%Start here Tax is a real burden…
  14. 14. 80% R&D is publicly funded. Aspiration to achieve Korea’s 20-80 ratio.Curious fact: ‘67 IMF-directed Korea came to Brazil to learn their modernisation pgm … chaebols anyone? ‘Self-reliance’ industrial policy during military rule funded world class technology prowess in aviation, ag and energy. These are legacy investments, who are the new ‘chaebols’?
  15. 15. 7% 65% unemployment, hard to find qualified people. expansion of domestic credit 7.2 50 years of schooling average. 22 % can’t read a page of text. 50 % functional illiteracy. % employment is in the informal economy. …leading to Bel-India… a Europe elite class (Belgium) in an India economy
  16. 16. …but social transfers are creating a middle class, and as long as the commodity boom continues, this new middle class will grow.
  17. 17. Why China grows … and Brazil doesn’t Follow the TFP
  18. 18. What makes Brazil Brazil? Or why is the Brazil story so hot?… Oops, it’s inflation.. Hot money chasing 11% interest.
  19. 19. What does the future hold for Brazil?
  20. 20. Excitement over presalt findings that will vault Brazil into major energy exporter (to emerging Asia) …
  21. 21. Source: PWC Future of World Trade 2030 … South-South (China) trade will boom….
  22. 22. 40 out of 81 anti-dumping measures taken by Brazil are against Chinese products.Brazil’s energy and commodities sector loves China, but the manufacturing sector is less enamored. A wave of tariffs and talk of currency war is first reaction. This will be an interesting relationship to follow.
  23. 23. Blackout along Paulista Ave, Sao Paulo and Latam’s financial center tests Brazil’s readiness for World Cup and Olympic Games. Blackouts in the future
  24. 24. Paraisópolis, São Paulo, Brazil.No mass job creation, no boom to fuel social transfers, Europe-India schism lives on.
  25. 25. .. It might end up with debris of energy boom and bust, a repeat of coffee’s 1930s boom and bust

×