Transcript In US$ billion - The Brazilian

Challenges to economic growth in a global
crisis scenario
2012 Brazil Summit – Brazilian-American Chamber of Commerce
New York, April 23rd, 2012
Luciano Coutinho
President
The Global Scenario in 2012-13
US
Europe
China
Signs of improvements, but
recovery will be slow
Central Bank warded off panic, but
fundamental problems remain.
Soft landing
A scenario of slowdown in world growth: according to the IMF,
growth will be at 3.5%.
Europe’s growth will be below the world average, with some
countries in recession.
2
Manufacturing slowdown is a global challenge
Purchasing Managers Index (PMI), selected countries In basis points*
Germany
Source: Bloomberg
Produced by: APE/BNDES
* Values higher than 50 indicate growth
France
Italy
3
USA: Fifty months after the beginning of the recession,
employment had not yet recovered
Path of recovery of US employment following recessions since 1960
(t = 0 in the month immediately prior to the beginning of a recession)
4
Source: Bloomberg. Produced by APE/BNDES
Europe
 European crisis is still a focus. Spanish bonds spiked recently.
Bond Profitability over 10 years (in %)
Updated 04/10/2012
7
Spain
18
Portugal
16
6.5
14
6
12
5.5
10
5
8
4.5
6
Source: Bloomberg.
1-Mar-12
1-Jan-12
1-Nov-11
1-Sep-11
1-Jul-11
1-May-11
1-Mar-11
1-Jan-11
1-Nov-10
1-Sep-10
1-Jul-10
1-May-10
1-Mar-10
1-Apr-12
1-Jan-12
1-Oct-11
1-Jul-11
1-Apr-11
1-Jan-11
1-Oct-10
3
1-Jul-10
0
1-Apr-10
3.5
1-Jan-10
2
1-Jan-10
4
4
5
China 2011: Slight slowdown
China Growth Rate
(var. % Q-on-Q from previous year)
Chinese gov't expects
growth of 7.5% in 2012
14.0
12.0 11.3
11.9
10.7
10.1
9.1
9.0
10.0
10.3
7.9
8.0
6.8
9.6 9.8 9.7 9.5
9.1 8.9
8.1
6.2
6.0
4.0
2.0
Source: Bloomberg. Elaborated by APE/BNDES
2012 Q1
2011 Q4
2011 Q3
2011 Q2
2011 Q1
2010 Q4
2010 Q3
2010 Q2
2010 Q1
2009 Q4
2009 Q3
2009 Q2
2009 Q1
2008 Q4
2008 Q3
2008 Q2
2008 Q1
0.0
Annual Growth
(in var. %)
2006
12.7
2007
14.2
2008
9.6
2009
9.2
2010
10.4
2011
9.2
6
Trends: relocated growth. Emerging countries lead
global expansion
Real variation of GDP (moving average - 4 years)*
Advanced economies vs. Emerging economies
9.0
8.0
Emerging
Forecast
Advanced
7.0
6.0
5.0
4.0
3.0
2.0
1.0
19
8
19 3
8
19 4
8
19 5
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
1
20 2
1
20 3
1
20 4
1
20 5
1
20 6
17
0.0
Souce: FMI/WEO april/2012. 2012-2017: forecasts.
7
Why can Brazilian
economy achieve a
sustainable growth?
8
The Brazilian economy
Social inclusion sustains dynamic domestic market;
Robust banking system that is not exposed to
problematic assets/countries;
Growth is
sustainable
Investment leading GDP growth;
Several investment opportunities:
 Oil & Gas, Infrastructure, Energy, PAC 2,
Competitive sectors, 2014 World Cup, 2016
Olympic Games...
The Brazilian government has room to maneuver;
Challenge: To increase the competitiveness of
industry/services/public sector.
9
Growth sustainability
GDP growth, in % per year
Source: IBGE.
Produced by: Ministry of Finance. *forecast
10
Inflation slowing down
Consumer IPCA Inflation Index (% MoM)
Source: IBGE
Produced by: Ministry of Finance
11
Fiscal sustainability
 Public indebtedness is falling and public accounts are under control.
Net Debt of the Consolidated Public Sector (% GDP)
End of Fiscal Period
The Finance Ministry
expects to reach a
nominal result close to
zero in 2014.
60.4
54.8
52.0
Source: Bacen
* Market
expectations
50.6
48.4
47.3
45.5
42.1
39.2
38.5
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
36.5
36.4
2011
2012*
35.0
12
2013*
ar
-0
Ju 2
lNo 02
vM 02
ar
-0
Ju 3
lNo 03
vM 03
ar
-0
Ju 4
lNo 04
vM 04
ar
-0
Ju 5
lNo 05
vM 05
ar
-0
Ju 6
lNo 06
vM 06
ar
-0
Ju 7
lNo 07
vM 07
ar
-0
Ju 8
lNo 08
vM 08
ar
-0
Ju 9
lNo 09
vM 09
ar
-1
Ju 0
lNo 10
vM 10
ar
-1
Ju 1
lNo 11
v11
M
Unemployment falling
Unemployment rate (%)
16.0
14.0
August, 2003
12.9
12.0
10.0
8.0
Source: IBGE
13.1
11.4
10.8
February, 2012
10.2
8.9
7.5
6.0
5.7
4.7
4.0
13
Workers’ salaries have risen
Minimum Salary: Real Variation (Deflator- IPCA)(%)
13.11%
10.71%
Average of 5.7% p. a.
9.79%
9.17%
7.42%
6.57%
4.77%
3.94%
3.13%
2.23%
1.83%
0.68%
3.56%
0.34%
-1.26%
-3.97%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Ministry of Labour and Employment, Central Bank
14
Social sustainability
 Improved distribution of income
Average growth of income between 2000 and 2008, in % p.a.
15.1%
BRICS: Inequality of
income has fallen in Brazil
20% more
poor
8.5%
7.6%
6.6%
20%
more rich
5.8%
2.8%
1.8%
1.0%
Brazil
Brasil
India
Índia
0.9%
0.0%
China
China
Sth. Africa
África
do Sul
Russia
Rússia
Source: OECD and Finance Ministry
15
Brazilian is now a middle class country
Brazilian Population: Economic Classes (millions of people)
* Based on PNAD (IBGE) data
Source: FGV
Produced by: Ministry of Finance
16
Credit has the potential to expand
Total Credit for Housing – in % of GDP
55
4.70
Total Credit
48.8
Housing Credit
50
43.5
45
45.0
40.5
5.0
4.5
4.0
3.5
3.0
40
35.2
35
30.8
2.0
1.5
1.0
Ja
n0
Ap 7
r-0
7
Ju
l-0
7
Oc
t-0
7
Ja
n0
Ap 8
r-0
8
Ju
l-0
8
Oc
t-0
8
Ja
n0
Ap 9
r-0
9
Ju
l-0
9
Oc
t-0
9
Ja
n1
Ap 0
r-1
0
Ju
l-1
0
Oc
t-1
0
Ja
n1
Ap 1
r-1
1
Ju
l-1
1
Oc
t-1
1
Ja
n12
30
1.48
25
2.5
Source: Brazil’s Central Bank
17
Investment perspectives are firm
Investment rate in % of GDP (GFFC/GDP)
24.0
22.0
20.4
19.5 19.3
19.1
18.1
17.4
16.4
16.1
16
16.4
20
14
*
20
13
*
20
11
20
12
*
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
15.3
18
Source: IBGE. *Projections from the Finance Ministry
Investment perspectives are firm
 Oil and Gas, as well as Infrastructure will lead investments over the coming
years.
Sectors
Industry
Oil & Gas
Mining
Steel
Chemical
Vehicles
Electronics
Pulp & Paper
Textile and Apparel
Ind. Health Care Complex
Aviation
US$ billion
2007-2010 2012-2015
263
341
136
202
39
33
18
12
14
14
20
32
12
14
11
15
6
8
6
6
2
4
Growth
%
% year
29.5
5.3
48.5
8.2
(13.9)
(2.9)
(33.6)
(7.9)
4.9
1.0
58.8
9.7
17.5
3.3
30.9
5.5
33.3
5.9
9.1
1.8
158.5
20.9
Infrastructure
187
229
22.2
4.3
Housing
341
491
44.2
7.6
TOTAL
791
1062
34.1
6.0
19
New record of the brazilian crop in 2011
In million tons of grains (cereals, legumes and oilseeds)
Source: Conab/MAPA
Produced by: Ministry of Finance
20
PAC 2 and several investment challenges in
the infrastructure sector
PAC 2 Projects
(US$ bn)
PAC Better City
2011 - 2014 After 2014
32.6
-
Total
32.6
PAC Citizens' Community
13.1
-
13.1
PAC My House, My Life
159.0
-
159.0
PAC Water & Electricity
for all
PAC Transport
PAC Energy
17.5
-
17.5
59.7
263.8
2.6
358.2
62.3
622.0
Total
545.7
360.8
906.5
21
US$/R$ = 1.75
Investments: World Cup 2014
In US$ billion
Stadiums
Estádios
3.3
Urban Mobility
Mobilidade
Urbana
Portseand
Airports
Portos
Aeroportos
6.6
3.1
Total Infra Civil
Telecom
e energia
Telecoms
and
Energy
Health ande Safety
Segurança
saúde
Hotels
Hotelaria
13.0
2.2
2.6
1.1
Total Infra
Source: Ministry of Sports and Ministry of Finance
18.9
22
US$/R$ = 1.75
Challenges to industrial sector
Industry is facing strong competition
Manufactures Goods Balance – US$ billion
Source: MDIC
Produced by: Ministry of Finance
*12-month basis by February 2012
23
Evolution of exchange rate
Nominal Exchange Rate (R$/US$)
Source: CMA Brasil
Produced by: Ministry of Finance
24
Challenges to Industrial sector
Recent measures of “BRASIL MAIOR” Plan
1) Tax reductions (payroll)
2) Domestic production stimulus
3) Foreign trade financing
4) Barriers to unfair competition
5) Incentives to Information Technology and
communications sectors
6) Credit for investment – PSI 4
7) Automotive Regime (2013-2017)
25
Some challenges must be overcome to sustain longterm growth
Long-term Agenda
Generate continuous opportunities for social ascension
and to eradicate poverty;
 Increase the rate of domestic savings;
 Diversify sources of long-term funding;
 Foster innovation and sustainability;
 Solid and growing investment in infrastructure;
Training/education of the workforce to maintain
significant gains in productivity;
 Improve competitiveness of Brazilian industry: reduce
systemic costs
32
33