Transcript Brazil aced the crisis test

The BNDES and the perspectives for
the Brazilian Economy
Luciano Coutinho
President of the Brazilian Development Bank (BNDES)
March 3rd, 2010
Brazil aced the crisis test
 The Brazilian economy can grow much faster than the average in
developed countries;
 The domestic market will make the expansion in demand feasible:
basic household consumption, housing and durable goods;
 Investments will be driven by four main sectors: oil & gas, electric
power, logistics and residential construction;
 Opportunities for intensive strategies in innovation and social and
environmental sustainability;
 Main challenges: increase aggregate investment/GDP rate, and
boost competitive progress in the manufacturing industry.
2
Global Growth
USA
Euro Zone
Germany
France
UK
Japan
Mexico
Brazil
China
India
Russia
GDP Growth Rate (%)
IMF Forecasts
IIF Forecasts
2010
2011
2010
2011
2.7
2.4
3.0
2.6
1.0
1.6
1.7
1.6
1.5
1.9
1.4
1.7
1.3
2.7
1.7
2.2
2.1
1.2
4.0
4.7
4.4
3.5
4.7
3.7
5.8
4.0
10.0
9.7
10.0
10.0
7.7
7.8
8.5
9.0
3.6
3.4
3.7
2.8
Source: IMF and IIF.
3
Countries’ share of Brazilian exports
 Developing countries have increased their share of Brazilian
exports. These countries were less affected by the crisis and they
are expected to show higher growth levels in the years to come.
2002
2008
Developing
Countries
Developing
Countries
38%
52%
Developed
Countries
62%
Source: Ministry of Development, Industry and Trade. Elaborated by: MF/SPE
Developed
Countries
48%
4
GDP may grow 5% p.a. in the 20102014 period
GPD: Annual Real Variation (%)
6.0
5.0
4.0
3.0
2.0
1.0
0.0
6.1
5.7
5.1
5.0
4.0
2.8
3.2
2.5
0.1
Average Average
1984-93 1994-03
2004
2005
2006
2007
2008
2009
*
Average
2010-14
* 2009 and Avg 2010-14: BNDES' Forecasts.
Sources: IBGE and BNDES.
Source: IBGE.
5
Brazilian industrial downturn was mainly
due to weak external demand ...
Industrial Production, Retail Sales and Exports
(index: September 2008=100)
110
105
100
95
Retail Sales
100
104.4
96.8 Industrial Production 92.4
90
82.5
85
80
75
70
69.6
Exports of Manufactured goods
Ja
nF e 08
b
M -08
ar
Ap -08
M r-08
ay
Ju -08
nJu 08
Au l-08
g
Se -08
pOc 08
t
No -08
v
De -08
c-0
Ja 8
nF e 09
b
M -09
ar
Ap -09
M r-09
ay
Ju -09
nJu 09
Au l-09
g
Se -09
p09
65
80.6
Source: IBGE, Secex e Funcex.
6
Household consumption resumed growth
Growth Rate
Quarter by Quarter (%)
4.0
3.5
3.0
2.4
2.1
2.0
1.1
1.0
1.4
1.4
1.4 1.4
1.7
0.9 0.9
0.5
2.0
1.6
1.0
1.2
2.4
1.4 1.3
1.0
0.9
0.5
0.5
0.4
0.1
0.0
3Q 2009
2Q 2009
1Q 2009
3Q 2008
-1.2
2Q 2008
1Q 2008
4Q 2007
3Q 2007
1Q 2007
4Q 2006
3Q 2006
2Q 2006
1Q 2006
4Q 2005
3Q 2005
2Q 2005
1Q 2005
4Q 2004
3Q 2004
2Q 2004
1Q 2004
4Q 2003
3Q 2003
2Q 2003
1Q 2003
-2.0
2Q 2007
Source: IBGE
-1.2
4Q 2008
-1.0
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Unemployment rate fell...
 Unemployment rate down from 10.2% in Jan/05 to 7.2% in Jan/10
Average unemployment rate (%) - IBGE
10.9
10.2
2005
9.3
2006
2007
9.3
2009
8.2
2008
8.0
2010
7.2
6.8
Jan
Source: IBGE
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
8
…and wages increased
REAL WAGES - Average for the last 12 months
R$ Billion
29.56
30
29
29.36
28.66
28
26.68
27
26
25
25.13
24
23
23.61
21.93
22
Source: IBGE
ec
-0
9
D
ug
-0
9
A
pr
-0
9
A
ec
-0
8
D
ug
-0
8
A
pr
-0
8
A
ec
-0
7
D
ug
-0
7
A
pr
-0
7
A
ec
-0
6
D
ug
-0
6
A
pr
-0
6
A
ec
-0
5
D
ug
-0
5
A
pr
-0
5
A
ec
-0
4
D
A
ug
-0
4
21
Up to December 09
Source: IBGE
9
Investment has been recovering
since the second quarter of 2009
Gross fixed investment
Percentage Change From Preceding Quarter (%)
10.9
7.1
3.7
3.5
1.0
3.4
0.7
-0.1
1.8
0.4
-0.9
6.5
5.8
5.4
3.2
4.1
2.2
4.3
3.0
2.0
-1.0
-9.9
-11.0
*
04 004 004 005 005 005 005 006 006 006 006 007 007 007 007 008 008 008 008 009 009 009 09
0
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
20
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Source: IBGE and BNDES/APE
*forecasting
10
Credit/GDP ratio grew even after the crisis
worsened in Sept/08
Evolution of Credit/GPD ratio (%)
50
S ourc e : Bra zilia n Ce ntra l Ba nk
45.0
44.6
2009
2010*
45
41.3
40
34.2
35
30.2
30
28.1
24.0
25
24.5
22.0
20
2002
2003
*Up to January
2004
2005
2006
2007
2008
11
State-owned banks sustained credit after
the crisis
Credit Growth
(Index September 2008 = 100)
Contribution to Credit
Growth (Sept/08-Jan/10)
150.1
150
Public Banks
Private Banks
140
141.2
144.6
132.9
130
118.3
138.8
121.2
109.0
106.9
102.4
100
100
102.6 102.9
109.5
103.2
105.6
103.3
Ja
n10
9
ov
-0
N
09
Se
p-
Ju
l-0
9
ay
-0
9
M
09
ar
M
Ja
n09
8
ov
-0
N
08
90
Se
p-
Private
Banks
27%
113.9
120
110
Other Stateowned Banks 36%
BNDES
37%
The BNDES alone was responsible for 37% of the
increase in credit from Sept/08 to Jan/10
Source: Bacen.
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Impact of anti-cyclical policies
on debt
120.0
Forecast
117.0 Italy
115.0 Japan
Public Sector Net Debt (%GDP)
110.0
101.3
100.0
90.0
80.0
80.4
76.2 Germany
75.1 UK
72.9 France
70.0
66.8 US
56.9
60.0
50.0
54.1
43.9
40.0
42.3
38.3
43.4
42.0 Brazil
38.8
30.0
2003
2004
2005
Source: IMF and Brazilian Central Bank.
2006
2007
2008
2009
2010
13
Investment has strong growth path
Forecast of Investment Ratio 2009-2012 (% of GDP)
22.0
21.2
21.0
20.2
Forecast
20.0
19.0
19.0
17.6
18.0
17.0
18.6
16.9
16.4
16.0
15.0
2006
2007
2008
Source: BNDES. Elaborated by: APE/BNDES
2009
2010
2011
2012
14
BNDES was responsible for 37% of
total credit increase since Sept/08
BNDES Approvals and Disbursements1 (US$ billion)
85.2
90
Disbursements
80
Approvals
66.3
70
60
68.8
88.2
71.5
50.6 50.5
50
40
34.1 33.1
30
20
19.3
10.9
13.1
22.3
23.5
13.6 12.9
10
0
2003
2004
2005
2006
2007
2008
2009
2010*
*last 12 months up to January 2010
Source: BNDES. *considering the average exchange rate for each year
15
The government continues to stimulate the
economy
New measures to stimulate the economy in 2010
FINANCING LINES US$ 77 billion
 Federal government credit lines for the
BNDES
FISCAL INCENTIVES
US$ 1.8 billion
 Extension of Tax Exemption on
Industrialized Products (IPI) for Capital
Goods
 Federal government extension of subsidies  Temporary suspension of IPI,
over the interest rate for financing granted
PIS/Cofins and Import Taxes (II) related
by the BNDES (Capital Goods, exports and
to investments in refining and the
innovation)
petrochemical industry
 Loans of US$ 8 billion, using federal
government funds, for the Merchant Navy
Fund
FINANCIAL INCENTIVES
 Permission for banks to issue a new bond,
entitled the Financial Letter/Note, to raise
long-time funding.

Extension to 2014 of exemption of
PIS/Cofins taxes on retail computers
 Exemption of PIS/Cofins, IPI and II on
computer parts and components
acquired for the "One Computer for
Every Child Program".
Source: Ministry of Finance
US$/R$ = 1.80
16
My House, My Life
462,293
New credits (homes contracted)
275,528
186,765
74,554
88,452
93,844
98,259
2002
2003
2004
2005
New credits
141,110
143,649
130,289
2006
2007
2008
2009
My House, My Life Program
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BNDES ProCopa Programs
Arenas
Up to US$ 2.7 billion to build and remodel stadiums and
urbanization investments in surrounding areas.
Tourism
Up to US$ 556 million to build, remodel, expand and
modernize hotels.
US$/R$ = 1.80
18
Challenges for infrastructure
Belo Monte Hydroelectric Plant and, afterwards, Tapajós;
Railways, roads and ports;
2014 World Cup;
PAC - Urban Transport;
2016 World Olympics;
High-speed Train (TAV);
Environmentally sustainable projects and concern for
surrounding areas.
19
Investment outlook: positive prospects
Sectors
US$ billion
2005-8 2010-13
Growth
(%)
Infrastructure
111
152
6.5
Industry
191
271
7.2
Total
302
423
7.0
US$/R$ = 1.80
Source: BNDES Forecast
20
Investment in Industry: Domestic-led sectors
have already recovered from the crisis
Sectors
US$ billion
Growth
2005-2008
2010-2013
% year
Oil and Gas
112
171
8.8
Mining
29
25
(3.1)
Steel
15
20
5.7
Petrochemical
5
17
28.9
Vehicles
12
17
7.3
Electronics
8
12
6.7
Pulp & Paper
10
10
0.5
Industry
191
271
7.3
Source: BNDES
21
Investments in Infrastructure were not
affected by the crisis
Sectors
US$ billion
Growth
2005-2008
2010-2013
% year
Electric Power
38
51
6.4
Telecom
37
37
0.2
Sanitation
12
22
11.7
Railroads
9
16
13.2
Roads
23
33
7.8
Ports
5
14
22.9
Infra
111
Source: BNDES
152
6.5
22
Brazil’s Long Term Challenges
 Resume and qualify long-term planning (energy, logistics,
environment, IT infrastructure, ...);
 Promote and stimulate domestic savings in order to provide
long-term funds for investment (banks and capital market)
 Develop capacity for innovation and competitiveness in the
manufacturing industry, and promote global presence of
Brazilian companies (vs. significant challenge due to
exchange rate appreciation)
 Increase opportunities for social mobility (job expansion,
development/improvement in education) and reduction of the
inequality in income distribution;
 Promote innovation and development of renewable energy
23
sources.
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