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Manuela Merki, Dr. rer. pol.

Independent Economic ConsultantPost-Doc UFPR

Economic Outlook Brazil

Brazil 2014

Source: IBGE, BCB

Brazilian economy shows little euphoria

GDP (real term), % change to previous year

Optimism lost ground

Source: CNI, Fecomercio-SP

Consumer and Business Confidence

FIFA World Cup (06/14 – 07/14)

Benefits:

� Infrastructure

� Investment

� Consumption

� Tourism

� Reputation

But:

� Small effect in economic terms

� Crowding-out effects

� Tourism

� Consumption

� Workforce

� Extended holiday

Presidential election (10/14)

� Demonstrations in mid 2013 (Confederations Cup)

� More than 2 million people expressed discontent

� Protests got broad consent

� High popularity of Dilma Rousseff

� 39% consider current government excellent or good

� 55% approve of her way of governing

Source: IBGE, BCB

Structural turning point

GDP (real term), % change to previous year

Nov 12th 2009 Sep 28th 2013

Source: BCB

Exchange rate BRL/USD, monthly (end of period)

Appreciation and devaluation of the real

Service boom and deindustrialization

Source: IBGE

Value added (real terms), compound annual growth

Service sector (68%)Industry (26%)(6%)

Retail sales doubled within 8 years

Source: IBGE

Retail sales (real terms), 2011=100

Expansion in credit volume

Source: BCB

Net loans in relation to GDP, %

0

2

4

6

8

10

12

14

16

18

20

Individuals Legal entities

Rebound of the manufacturing industry?

-4%

-2%

0%

2%

4%

6%

8%

2010-2013 2013

Source: IBGE

Value added (real terms), compound annual growth

Service sectorIndustry

What does Brazil have to offer?Market size

Surface, km2 (tsd) Population, 2012 (m)

Source: World BankSource: UN FAO

What does Brazil have to offer?Economy

� 7th largest GDP: USD 2´253 billion (2012)

� Vast natural resources

� Diversified industrial base

� Stable democracy

� Good relations with neighbors

Income per capita, 2010

Source: atlasbrasil.org.br

Closed economy

Source: World Bank

Merchandise trade / GDP in %, 2012

Doing Business in Brazil is not easy

Source: IFC / World Bank

Ease of Doing Business 2014

134

116

100

96

92

53

43

34

0 20 40 60 80 100 120 140 160

India

Brazil

Regional Average

(Latin America & Caribbean)

China

Russia

Mexico

Colombia

Chile

Solid exports to Brazil

Source: EZV SwissImpEx

Swiss exports (annualized), 12/2002=100

Trade dominated by agriculture and chemical-pharmaceutical industryTrade Switzerland – Brazil, 2013

Source: EZV SwissImpEx

Reasons to believe in Brazil

Demography and Human Capital

Urbanization

Infrastructure

Oil & Gas

Commodities

Industry base

Growth segments

� Urbanization / Infrastructure

� Transportation, logistics� Waste management� Planning and control system

� Sustainability� Cleantech, renewable energy� Natural resources, biotech

� Technology� Productivity improvement

� Quality

� Education / Information� Education

� Social Media

� Personalized marketing

� Luxury / High quality goods

� Watches and jewelry

� Travelling

� Medtech

� Wellness

� Securities

Thank you!

Manuela Merki, Dr. rer. pol.Curitiba – Brazil

info@manuela-merki.ch

www.manuela-merki.chwww.swissq.com.br (under construction)