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Brazilian Economic Outlook for 2011
Minister of FinanceGuido Mantega
2011 Brazil Summit
New York, April 18, 2011
2
• The world economic recovery slowly continues• World divided between:• Slow growth, high unemployment and big fiscal deficits
in advanced countries• Fast growth, strong job creation and inflation in
emerging markets
• Advanced countries have not recovered from crisis yet.
• Good news: Brazil belongs to the second group (countries with high growth and employment rates).
Source: IMFProduced by: Ministry of Finance
3
New global economic scenario after 2008 crisisGDP annual average growth, in % YoY
4
2011: various recovery pacesGDP forecasts, in % YoY
Source: The EconomistProduced by: Ministry of Finance
5
Brazil: Sustainable Growth Strong domestic market
Increasing investment rate Adjustments for post-crisis period:
Economic growth slowdown Inflation control
Fiscal results strengthening
No macroeconomic imbalances
Source: IBGEProduced by: Ministry of Finance
6
GDP growth led by domestic demandIn %, YoY
* Ministry of Finance forecasts
7
Investments reached record levels in 2010In % YoY
Source: IBGEProduced by: Ministry of Finance
8
* PAC – Growth Acceleration Program Source: Ministry of Planning, Budget and Management
Produced by: Ministry of Finance
Brazilian investment plan – PAC 1 improved GDP growth In US$ billion
9
Brazilian investment plan – PAC 2 supports future growthIn US$ billion
Source: Ministry of Planning, Budget and Management
Produced by: Ministry of Finance
* PAC – Growth Acceleration Program
10
Brazilian investment growth rate above other EMsIn % GDP
Source: IMF and Crédit SuisseProduced by: Ministry of Finance
(Investment rate: 48,1% of GDP)
Source: Economatica Financial Consulting Produced by: Ministry of Finance
11
Brazil: outstanding results for the non-financial sector168 non-financial companies balance, in US$ billions
Source: Bankscope, in: IIF Capital Markets Monitor, January 2011Produced by: Ministry of Finance
12
Banking sector growing fast in BRICSAssets of major 5 domestic banks, by country, in US$ trillions
Source: BM&F BovespaProduced by: Ministry of Finance
13
Brazilian stock market widensBrazilian stock market trade, in R$ billion
* Accumulated in 12 months, by March 2011
14
Brazilian economy has been adjusted to the 2011 scenarioMaintenance of countercyclical policy in a context of economic recovery
Reversal of 2009-2010 economic stimulus R$ 50 billion cut in public spending Spending efficiency Minimum wage at R$ 545 Ensuring fiscal soundness Ensuring inflation control
Source: Brazilian Central BankProduced by: Ministry of Finance
15
Robust primary surplus reduces nominal deficitIn % of GDP
* Ministry of Finance forecasts
Public Sector primary resultIn % GDP, accumulated in 12 months
Source: National TreasuryProduced by: Ministry of Finance
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Source: Ministry of FinanceProduced by: Ministry of Finance
17
Job formalization reduces social security deficitSocial security annual deficit, in % of GDP, accumulated in 12 months
Source: Ministry of FinanceProduced by: Ministry of Finance
18
Payroll remains stable compared to GDPIn % of GDP
* Ministry of Finance forecasts
19
Sound fiscal situation compared to other countriesBudget balance forecasts for 2011, in % GDP
Source: The EconomistProduced by: Ministry of Finance
20
Inflation: a global issueInflation forecasts for 2011, in % YoY
Source: The Economist and Brazilian Central BankProduced by: Ministry of Finance
Source: Thomson ReutersProduced by: Ministry of Finance
21
Commodity-Price index- CRBCommodity-price index, 1967=100
* In March 31st, 2011
22
Oil price historic highsIn US$, nominal price per barrel (Brent), average monthly and deflated by the U.S.A inflation.
Source: BloombergProduced by: Ministry of Finance
23
Measures to moderate growth and contain inflationCommodity inflation: depends on international markets Stimulus to increase the supply of commodities Government measures and objectives:• Stimulus to agricultural supply increase• Compulsory requirements increase• Brazilian Central Bank’s macroprudential measures• SELIC interest rate rise• Reduction of activity level and public expenditure• 1.5% IOF tax increase in credit operations for households
Source: IBGE and Brazilian Central BankProduced by: Ministry of Finance
24
Inflation within the bounds set by the targeting regime. Consumer Price Index (IPCA), in % YoY
*Brazilian Central Bank forecasts
Source: IBGEProduced by: Ministry of Finance
25
Inflation under controlIn % change from preceding month
Source: IBGEProduced by: Ministry of Finance
26
Public transportation and fuels pressurized prices in MarchIn % change from preceding month
27
Foreign Exchange MarketIn US$ million
Source: Brazilian Central BankProduced by: Ministry of Finance
* In April 1st, 2011.
28
Brazilian Real appreciation in relation to selected currenciesIndex (January 2005 = 100), exchange rate deflated by inflation differentials
Source: FED St. Louis and Brazilian Central BankProduced by: Ministry of Finance
* Position for real changes in February, 2010
29
Brazilian Real appreciation in relation to selected currenciesIndex (January 2009 = 100), exchange rate deflated by inflation differentials
Source: FED St. Louis and Brazilian Central BankProduced by: Ministry of Finance
* Position for real changes in February, 2010
30
Brazilian Real appreciation in relation to selected currenciesIndex (May 2010 = 100), exchange rate deflated by inflation differentials
Source: FED St. Louis and Brazilian Central BankProduced by: Ministry of Finance