Brazil Ministry of Finance - Presentation

Brazil: Sustainable

GrowthMin. Guido Mantega

April 2010

Source: The EconomistProduced by: Ministry of Finance

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* The Economist forecast** Government forecast

Brazil: one of the fastest growing economies in 2010GDP growth forecast – selected countries – in % of GDP

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New social and economic paradigms

• Emphasis on a more robust growth

• Employment generation

• Social inclusion and income distribution

• Investment enhancement

• Government encourages and promotes growth

• Efficient stimulus programs

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Source: CAGED /MTEProduced by: Ministry of Finance

* Government forecast of 1.8 million for 2010, of which 657,259 comprised within the accumulated year period up to Mar-2010

Robust employment generation and more formal jobsNet employment generation – in thousands of workers

Source: PME/IBGEProduced by: Ministry of Finance

2010: the smallest unemployment rate in a time seriesUnemployment rate – in % of economically active population

Source: MDS, MTE and CPS/FGVProduced by: Ministry of Finance

New middle class and Brazilian unificationSocial class distribution - in % of population

Source: Kantar World PanelProduced by: Ministry of Finance

Social classes diversify consumption% change in the purchased value (food, beverages, hygiene and cleaning)* Average monthly household income is specified below

* Class D/E: from R$ 0 to R$ 1,115Class C: from R$ 1,115 to R$ 4,807Class A/B: from R$ 4,807 and on

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Highest employment rate in the worldNet employment generation forecast for Q2 2010*

Source: Manpower Consulting Produced by: Ministry of Finance

Gap within companies that expect job raising (43%) as opposed to the ones which expect a reduction (5%) in Q2 2010 (% between Q1:2010 and Q4:2009)

* Expected employment generation from Manpower Consulting research for the Q2 2010 based on interviews with 850 companies in Brazil

Purchasing power of minimum wageToday’s minimum wage buys more products – in numbers of staple food baskets

Source: DIEESEProduced by: Ministry of Finance

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Fontes: IDVProduced by: Ministry of Finance

Dinamycs of Brazilian domestic demandRetail sales – selected countries - % change from 2008 to 2009

Source: IBGEProduced by: Ministry of Finance

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Retail Sales - PMC% change from preceding every 12-month period

* Including automobiles, motorcycles, parts and pieces, andconstruction materials

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Government action is essential

• Infrastructure stimulus: PAC

• PAC is a strategic investment program with management and infrastructure planned actions

• Industrial sector policy

• Income distribution

• Acting and efficient State-owned companies (BNDES, BB, CAIXA, BNB, Petrobras)

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Investment enhancement

Source: IBGEProduced by: Ministry of Finance

% change from preceding year

* Ministry of Finance Forecasts

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Federal Government and State-Owned CompaniesInvestment

Source: Ministry of FinanceProduced by: Ministry of Finance

Cash basis - % of GDP


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Industry investment volume

Source: BNDESProduced by: Ministry of Finance

Industry resource distribution - realized and planned by sector of activity

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Decade of infrastructure to come

Source: Exame Infrastructure Yearbook 2009-2010Produced by: Ministry of Finance

Investments in R$ billions

Source: Abecip and CAIXAProduced by: Ministry of Finance

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Construction growth in BrazilAverage number of contracts by presidential terms

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2010: Sustainable and quality growth

• Growth is sustainable because it doesn’t create macroeconomic imbalances

• Inflation under control – efficient inflation targeting regime

• Robust fiscal rules – primary surplus target of 3.3 % of GDP in 2010 and continuous reduction in net public debt

• Low external vulnerability

Fontes: IBGE and Brazilian Central Bank Produced by: Ministry of Finance

Evolution of inflation index, target and expectations%

% change from every 12-month period

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* Market Forecasts FOCUS Report from April 9th, 2010

2020

Decomposition of Monthly Inflation (% change)

Source: IBGE. Elaborated by: MF/SPE

-0.2-0.10.00.10.20.30.40.50.60.70.80.9

Remaining itens Fuel (ethanol and gasolines)

Tranport (tickets and fares) Food (in house)

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Sustainable PAC: reduction of public debtFiscal results – primary surplus and nominal deficit/surplus - in % of GDP

Source: Brazilian Central Bank and The EconomistProduced by: Ministry of Finance


**

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Sustainable nominal deficit: reduction of public debtNominal deficit - in % of GDP

Source: The EconomistProduced by: Ministry of Finance

* Ministry of Finance Forecasts in February, 2010 ** G-20 nominal deficit average refers to Apr 15th, 2010 ed.

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Sustainable PAC: reduction in public debtPublic Sector Net Public Debt - in % of GDP

Source: Brazilian Central BankProduced by: Ministry of Finance

* Ministry of Finance Forecasts in February, 2010

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IIF Ranking on Investors Relation and Data Transparency

38 3735 34 34 33 32 31 30 29

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Deficit in Current Account does not bind growth, nor increaseexternal vulnerabilityCurrent Account – in US$ billions and % do PIB


* Government Forecasts

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Lower external vulnerabilityInternational reserves and external debt - in % of GDP and index


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From supporting to leading country

• Brazil is respected and highly regarded.

• Change: from debtor to creditor and new protagonist position.

• The myth that “Brazil is a second-class country” has fallen apart.

• Brazil could became one of the most dynamic countries in this decade.

Economy & Finance

Brazil Ministry of Finance - Presentation