Panorama macroeconômico brasileiro , Situación macroeconómica brasileña.

1. Mr.Antonio Fernando G.Bessa
Deputy Director
DEREX
Department of Trade and Foreign Affairs
Brazilian Economy
Overview

2. 2. Economic Highlights
3. Foreign Trade
4. Investments
DEREX | Department of Trade and Foreign Affairs
1. Institutional .

3. 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.
DEREX | Department of Trade and Foreign Affairs
IRS
Roberto Simonsen
Institute
Think tank specialized in
industrial issues. It’s also
responsible for the coordination
of Superior Council

4. 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
DEREX | Department of Trade and Foreign Affairs

5. DEREX | Department of Trade and Foreign Affairs
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

6. 1.015
379
700
Brazil SãoPaulo
State
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

7. Sao Paulo State and FIESP’s representativeness in Brazilian Economy
2. Economic Highlights
3. Foreign Trade
4. Investments

8. 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
10.0
2004
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%.
DEREX | Department of Trade and Foreign Affairs
Note: (*) Forecast: BCB/Focus, Apr, 12th, 2013
Source: IBGE Compilation : FIESP

9. 118.1
131.0
103.8
124.3
131.1
128.8
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
DEREX | Department of Trade and Foreign Affairs
Source: IBGE Compilation : FIESP

10. In 2012, vehicle production fell 1.8%. Production of cars grew with IPI reduction,
but the truck’s production decreased…
DEREX | Department of Trade and Foreign Affairs
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

11. The new light vehicle sales had been boosted by incentives granted by the
Government in 2012
Source: ANFAVEA Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
-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 category
Vehicles production Light vehicles Trucks Buses
1,000 units % YoY

12. Retail sales growth remains strong with an increase of 8.4% in 2012
Source: BCB Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
72.5
76.6
82.2
92.4
98.7
106.1
110.2
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

13. Strong demand versus flat supply...
Note: (¹) Index number, seasonally adjusted
Source: IBGE, Macrodados Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
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

14. ...consistent credit expansion in Brazil, but...
Note: (*) Preliminary data
Source: BCB Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
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 %

15. credit over GDP is still low compared to other economies
Source: World Bank Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
206%
194%
187%
173%
135%
122%
116%
71%
65%
61%
55%
55%
51%
26%
17%
Credit (% of GDP) - Selected Economies

16. The Brazilian tax burden is very high. Partners with similar ratio have a per capita
GDP more than three times higher
DEREX | Department of Trade and Foreign Affairs
Source: IBGE, IMF, IMD, RFB Compilation: DECOMTEC/FIESP
Tax burden x per capita GDP
Taxburden(%ofGDP)
Per capita GDP (PPP)

17. In April 2012 public banks started to reduce lending rate boosting competition.
This brought pressure on lending spreads, which began a declining trend.
Source: BCB Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
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

18. 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
DEREX | Department of Trade and Foreign Affairs
10.50%
7.25%
6.2%
5.2%
4.9%
5.2%
5.5%
5.8%
6.3%
6.59%
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)

19. Inflation remains within the bounds set by the government
Source: Brazilian Central Bank and the IMF Compilation: FIESP
DEREX | Department of Trade and Foreign Affairs
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)
IPCAinflation
Target
Upper/lowerbounds

20. …several stimulus policies are in progress in response to the ongoing international
crisis environment.
Stimulus policy
DEREX | Department of Trade and Foreign Affairs
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%.

21. Unemployment down in Brazil...
Source: IBGE Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
5.5
6.2
5.9
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)

22. Source: IBGE Development: FIESP
DEREX | Department of Trade and Foreign Affairs
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
(Millionpersons)
Women Men

23. Around 30 million people have entered the middle class from 2003 to 2009.
DEREX | Department of Trade and Foreign Affairs
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

24. 3. Foreign Trade
4. Investments
DEREX | Department of Trade and Foreign Affairs

25. Trade flow follows a positive trend. In 2011, exports and imports reached highest
historical level.
Forecast: FIESP *YTD until march
DEREX | Department of Trade and Foreign Affairs
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011 2012 2013*
Brazilian Trade Balance
Exports Imports Balance
USD bn USD bn
Source: MDIC Compilation : FIESP

26. Since 2008, commodities¹ represents the most part of Brazilian exports
DEREX | Department of Trade and Foreign Affairs
Note: (¹) Commodities represents primary products and semimanufactured goods
Source: MDIC Compilation : FIESP
20%
30%
40%
50%
60%
70%
80%
2006 2007 2008 2009 2010 2011 2012
Brazilian exports composition (% of total)
Commodities Non-Commodities

27. Asia is Brazil´s number 1 trade partner...
DEREX | Department of Trade and Foreign Affairs
Source: MDIC Compilation : FIESP
Trade Balance: share by trade partner (2012)
United States European Union Latin America Asia Others

28. Brazilian
Exports
USD bn
∆ %
(2012 x 2011)
Brazilian
Imports
USD 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
Source: MDIC Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs

29. Brazilian
Exports
USD mn
Brazilian
Imports
USD mn
Iron ores
and concentrates
30.989
Petroleum, crude 20.306 Petroleum, crude 13.406
Soybeans,
whether or not broken
17.455 Natural gas 3.336
Chicken 6.732
Coal, whether or powder,
unagglomerated
3.006
Soybean bran 6.595 Wheat grains 1.757
Rubber, in natura 662
Main BASIC products (2012)
Main primary products exports and imports...
Source: MDIC Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs

30. Brazilian
Exports
USD mn
Brazilian
Imports
USD 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
circuits
4.249
Main MANUFACTURED products (2012)
...main manufactured products exports and imports.
Source: MDIC Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs

31. 4. Investments
DEREX | Department of Trade and Foreign Affairs

32. 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
Source: BCB Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs

33. TOP 10 origins of direct investment in Brazil
DEREX | Department of Trade and Foreign Affairs
Source: BCB Development: FIESP
FDI in Brazil: share by country (2012)
Country US$ Mil Share
United 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

34. Brazil leads agribusiness production and exports globally for several products …
Source: USDA (apr/2013) and DEAGRO – FIESP Compilation : FIESP
DEREX | Department of Trade and Foreign Affairs
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%
ExportsProduction
Brazil | Leadership in World Ranking (2012/13)
Orange Juice Sugar Broiler Coffee Beef Soy Complex Corn Pork

35. DEREX | Department of Trade and Foreign Affairs
Note: (*) Estimative
Source: Conab (Apr/2013) and DEAGRO - FIESP. Compilation : FIESP
1.5 3.5
37%
217%
Area (million ha):
Production (million tons):
38
52
58
184
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
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.

36. Brazil stands out for the high share of renewable energy in its energy matrix than
the BRICS and G7 countries...
DEREX | Department of Trade and Foreign Affairs
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

37. Fifteen biggest Projects in the World’s Energy Sector* (USD bn)
DEREX | Department of Trade and Foreign Affairs
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