Brazil Overview 2010

8/2/2019 Brazil Overview 2010

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BrazilBrazilBrazilBrazil

OverviewOverviewOverviewOverview


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CONTENTCONTENTCONTENTCONTENT

OverviewOverviewOverviewOverview

EconomyEconomyEconomyEconomy

InvestmentsInvestmentsInvestmentsInvestments

BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEW

MainMainMainMain SectorsSectorsSectorsSectorsAgribusi

Auto Ind

Civil Con

Consum

Energy

Financia

Life ScieTelecom

HumanHumanHumanHuman ResourResourResourResour

About UsAbout UsAbout UsAbout Us

ABOUT THIS REPORTABOUT THIS REPORTABOUT THIS REPORTABOUT THIS REPORT

Brazil OverviewBrazil OverviewBrazil OverviewBrazil Overview was prepared by Fecountry. It gives a summary of the econforecasts for investments as well as ansectors in the Brazilian market. In addianalysis which includes topics on empl

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWOverviewOverviewOverviewOverview

GeographyGeographyGeographyGeographyBrazil is the fifth largest country in the world and hasquare kilometers). The coastline runs for more thanalong the South Atlantic .

The country comprises 26 states and the FederalDistrict, which includes the capital, Brasilia.

Geographically, Brazil consists of five basicre ions: North Northeast Midwest Southeast

PopulationPopulationPopulationPopulation

According to data published by the IBGE, the governapproximately 192 million in 2010 making it the fifth

Lan ua eLan ua eLan ua eLan ua e

and SouthSo Paulo, Brazils biggest city, is located in theSoutheast region, the latter representing about56% of Brazilian GDP.

The Northeast is an emergent region and hasincreased its share of GDP by almost 40% in thelast few years, now accounting for 13% of overallGDP.

The official language in Brazil is Portuguese. There aof the official language. English is the foreign langunumber of Spanish and French speakers has increas

ource: IBGE

an area of 3,287,000 square miles (8,514,0004,578 miles (7,367 kilometers), almost all of it

NorthNorthNorthNorthAmazonas

ent statistics office, Brazils population wasost populous nation on earth.

NortheastNortheastNortheastNortheast

SoutheastSoutheastSoutheastSoutheast

SouthSouthSouthSouth

MidwestMidwestMidwestMidwest

So Paulo

Rio de Janeiro

Braslia

re no significant local dialects or other derivationsge most used by the business community. Thed significantly in the last few years.

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWOverviewOverviewOverviewOverview

CurrencyCurrencyCurrencyCurrencyThe monetary unit is the Real (R$, plural Reais)which is divided into 100 units called centavos.

According to the countrys central bank (Banco Centras of September, 22nd 2010, the exchange rates were

ReligionReligionReligionReligion

e g on n raz as a grea er o ow ng among e

countries, and is more diverse. The Constitution guar

Over 70% of the population declared themselves Rothere are many other religious denominations suchLutheran, and Baptist. There are over a million and aJews, Muslims, Buddhists and numerous followers o

EducationEducationEducationEducation

Education in Brazil is regulated by the Federal Goverdefines the guiding principles for the organization of

Education is compulsory for a minimum of nine yearmiddle-income country, Brazil still has several undesystem is plagued by shortcomings and economic an

In spite of the low percentage of students undertakipopulation, the latest INEP/MEC IGC (General Coursevoca ona courses n raz , 1 7 e run y co ege153 higher education courses.

GovernmentGovernmentGovernmentGovernment

Brazil is a federal republic of twenty-six states togetconstitution with a governor and state legislature. Thturn, are divided into districts. Municipalities enjoy a

System of Government: Presidential RepublicHead of State: LuizLuizLuizLuiz IncioIncioIncioIncio LulaLulaLulaLula dadadada SilvaSilvaSilvaSilva, elected byDecember 31 2010

ource: Banco Central do Brasil | IBGE | Wikipdia | Ipea Data | T

l do Brasil),:

R$R$R$R$U$$ 1.00 1.7176

1.00 2.6903

1.00 2.2994

opu a on w en compare o o er a n mer can

antees absolute freedom of religion.

an Catholic at the last census (2000). However,s Protestant, Pentecostal, Episcopal, Methodist,half Spiritists or Kardecists, and small minorities off Candomble and Umbanda.

nment through the Ministry of Education, whichschool curricula.

s although standards are often deficient. As a largedeveloped regions and as a result its educationd social disparities.

g courses at a college level - around 8% of theIndex)ranking, published in 2009 shows 2,000cu es an ns u es, 179 un vers es an a ur er

er with the Federal District. Each state has its owne states are divided into municipalities, and these, indegree of autonomy.

irect vote, for the period January 1 2007 to

he Country of the Future CFA Magazine | Inep/MEC

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWEconomyEconomyEconomyEconomy

OverviewOverviewOverviewOverviewCharacterized by large and well-developed agricultuwith an expanding presence in world markets, the BrAmerican countries.

Since 2003, macroeconomic stability has steadily impconversely reducing currency exposure by shifting tdomestically held instruments as well as adopting afiscal discipline. In 2008, Brazil became a net externa

'

After record growth in 2007 and 2008, the onset of thBrazil's currency and its stock market BM&FBovesrepatriated resources with two quarters of recessionexports dwindled and external credit dried up.

However, Brazil was one of the first emerging markegrowth with controlled inflation since the economiceconomies in most developed countries, the Brazilicoveted in the world with a burgeoning middle class,supply of credit - a key source of expansion - has nev

suspended animation, the real estate market is devemultiplying, increasing a Brazilian footprint in the inare formed and are driving a reinvigorated capitalisthe rest of the world. By the second quarter 2009 conposting an expanded GDP of 9 percent from a year eeconomy. GDP grew 2.7 percent in the first quarter o

ource: Business Week (Bloomberg); Exame Special Issue - Melhores &stituto de Pesquisa Econmica Aplicada

EvolutionEvolutionEvolutionEvolution of growth rates ofof growth rates ofof growth rates ofof growth rates of GDPGDPGDPGDP(%)(%)(%)(%)

Source: IBGE - Created by Ipea/DIMAC/GAP

GDP markGDP mark

al, mining, manufacturing, and service sectors andazilian economy outweighs that of all other South

roved and international reserves have grown,e debt burden towards Real denominated andinflation targeting regime and a commitment to

l creditor and in the same year, two credit rating .

global financial crisis hit Brazil in September 2008.pa - saw large swings as foreign investorsensuing as global demand for commodity-based

ts to recover, experiencing one of the fastest rates ofiracle years of the seventies. At a time of lacklustern domestic market is becoming one of the mostthe like of which has never been seen before. The

er been greater. After decades in a state of

oping rapidly. Indigenous multinationals areernational arena. Productivity grows. New groups. At last, Brazil is stronger and more integrated with

sumer and investor confidence had revived, in Mayrlier, faster than any other Latin American2010 compared with the previous quarter.

Maiores; Cia Central Intelligence Agent : The World Factbook | IPEA

t prices chain-weight index (average 1995 = 100) - quarterly variationt prices seasonally adjusted chain-weight index (average 1995 = 100)

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OverviewOverviewOverviewOverviewThe first quarter was the peak of the economic recosecond quarter, figures already show the economy isfixed income strategist, the deceleration process in tboosting demand during the global financial meltdo

Brazil is the second-fastest growing economy amongexpanded 11.9 percent in the first quarter and aheadmonths of the year. Russia grew 2.9 percent.

The Central Bank of Brazil says that economic activitmost developed Southeast region (where a third of thbeing driven largely by the recovery in the industrial

The Bank further states that industrial expansion in tdomestic demand and an enhanced credit supply anrising demand and expanding credit have also led to i

Unemployment rates fell more than forecast in Aprilas the Brazilian economy heads toward its fastest grpercent by the end of the year, said Roberto Padova

number of unemployed Brazilians remained stable atsaid.

After presenting weak growth rates in the eighties ancurrent decade with an impressive 163% increase inaround R$ 10,000 in 2011.

According to Central Bank governor, Henrique Meiretar eted inflation rate band this ear.


very,says Finance Minister Guido Mantega. In thedecelerating. According to Bank of Americas.e second quarter reflects the end of tax breaks forn.

the BRIC countries at 9%, behind China, whichof India, which grew 8.6 percent in the first three

y has increased in all five regions of Brazil. In thee country's industries is concentrated), growth issector.

he Southeast can also be attributed to increasinghigher employment. In the other four regions,

ncreased economic activity, says the bank.

7.3 percent the lowest for that month since 2001wth in more than two decades. We can reach 6.8i, chief strategist at Banco WestLB do Brazil . The

1.7 million in April, the national statistics office

d nineties, IMF estimates show Brazil ending theverage income per capita, expected to reach

les, inflation will meet the 4.5% midpoint of the

Maiores; Cia Central Intelligence Agent : The World Factbook | IPEA 6


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Trade BalanceTrade BalanceTrade BalanceTrade BalanceIn July 2010, the Brazilian trade balance registered aUS$ 17.7 billion and imports US$ 16.3 billion.

In July exportsexportsexportsexports posted a month on month increase of14.1 billion). In July importsimportsimportsimports grew 10.1% (US$ 14.8 bicomparative periods.

Differing growth rates in exports and imports therefo- -.

approximately US$ 3 billion.

Based on an aggregate 12-month period, exports antrajectory since November 2009 (US$ 152.4 billion an

Balance Exports Imports

Trade Balance (monthly)Trade Balance (monthly)Trade Balance (monthly)Trade Balance (monthly)(US$ millions)Balance Exports, Imports

Source: Secex- Created by Ipea/DIMAC/GAP

. . ,


surplus of US$ 1.4 billion, with exports totaling

3.4% (US$ 17.1 billion), and 25% year on year (US $llion) and 45.3% (US$ 11.2 billion) for the same

re explain the decline in trade surplus in July 2010. ,

imports have reported a continuous recoveryd US$ 126.9 billion, respectively) through to July

Source: Secex- Created by Ipea/DIMAC/GAP

Exports Imports Balance

Trade Balance (2010/2009, July)Trade Balance (2010/2009, July)Trade Balance (2010/2009, July)Trade Balance (2010/2009, July)(variation %)

Maiores; Cia Central Intelligence Agent : The World Factbook | IPEA 7


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ForeignForeignForeignForeign InvestmentsInvestmentsInvestmentsInvestments in Brazilin Brazilin Brazilin Brazil

BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWInvestmentsInvestmentsInvestmentsInvestments

With the end of the crisis, renewed interest in theBrazilian market has seen an inflow of US$ 38 billioin FDI following a year on year decline of 42% in2009.

Estimates for FDI for this year reveal that China isdisplacing countries such as Holland, USA, Spain an

Brazil has overtaken the United States and Europeas an investment target and is already the thirdfavorite destination among multinationals planningto invest through 2012.

The country is in the spotlight because of the growinas well as the increasing importance of the Brazilian2010 and 3.2% in 2011, the UN estimates that invest2010. These may reach US$ 1.5 trillion in 2011, rising

2012 with emerging market countries taking the lea

The arrival of new investors is changing the traditionin the country for decades. And many have already ithe domestic economy: "Today Brazil is one of the wwith Brazil, says Sergio Marchionne, Fiat's Groupsin the country

ermany an a ng e ea among ma or nves or

with about US$ 10 billion.

WHERE DOES THE MONEY COMEWHERE DOES THE MONEY COMEWHERE DOES THE MONEY COMEWHERE DOES THE MONEY COME

The arrival of the Chinese is the new element in thetraditional players such as Germany, South Korea, B

ource: Exame Special Issue - Melhores & Maiores; Central Bank of Br

Source: Special Edition: Exame Melhores

United States and European countries have l

n

BACK INTO THE GAME:BACK INTO THE GAME:BACK INTO THE GAME:BACK INTO THE GAME: Following adecline, due to the global crisis in2009, foreign direct investmentreturned to growth this year(billions of dollars)

interest in sourcing raw materials (commodities)domestic market. Based on a global growth of 3% inent by multinationals should be US$ 1.2 trillion into between US$ 1.6 trillion and US$ 2 trillion in

due to interest in the primary sector.

l origins of those multinationals already installedncreased their investment to accompany the rise ofrld's safest places to invest. (...) We want to growCEO, inaugurating a new Case New Holland plant

Source: Special Edition: Exame Melhores e Maiores | 2010, July

rocess of recovering FDI in Brazil with moreitain and the US showing strong interest as well.

sil, OESP

e Maiores | 2010, July

ed foreign direct investment in Brazil in 2009

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWInvestmentsInvestmentsInvestmentsInvestments

There are at least two clear reasons for Chinese inte

Brazil is considered a strategic partner complemeresources to the construction industry and food tobillion.

Brazil offers a strongly expanding market with gromanufacture of many products from computers anTurnover in the retail trade has grown by 673% sinwhich are better distributed

HistoryHistoryHistoryHistoryIn 2007, foreign capital inflow jumped by 84%, reachianother 30% to US$ 45 million ranking Brazil ninth o

The financial crisis dampened inflows with investmebeing used to address the needs of company headqu

This year, projections show a return to the level of Uin Europe, the Central Bank has conservatively revise

Brazilian Investments AbroadBrazilian Investments AbroadBrazilian Investments AbroadBrazilian Investments Abroad

With the pace of overseas acquisitions, Brazilian inveincrease of 250% over the previous year.

The speed of globalization of Brazilian companies isstrengthening economy. For the first time, Brazil has

emse ves mu na ona s.

The last few years of currency stability, stock exchanand the evolution in management skills were the dridimension and triggering a round of surprising over

For the first five months of 2010, Brazilian direct ovrepresenting investments mainly in the food, metallufirst two months of 2010, Brazilian companies investrecorded in the period since Central Bank records fo

ource: Exame Special Issue Melhores & Maiores; Central Bank of Bras

est:

nting Asian economies and supplying naturalfeed an increasingly affluent population of 1.4

th potential in infrastructure and for thed home appliances to automobiles and tractors.ce 2003, supported by a real increase in incomes

ng almost US$ 35 billion and the following year byn the list of destinations for productive capital.

nt capital destined for emerging markets insteadrters in Europe, USA and Japan.

$ 45 billion although given continuing uncertaintiesd its forecast down to US$ 38 billion.

stments will reach US$ 15 billion in 2010, an

stonishing - and a direct reflection of the countrysa crop of companies that can rightly call

e listings, an increasingly robust domestic marketers behind a group of companies seeking a globaleas acquisitions.

rseas investment amounted to US$ 8 billion,rgy, construction and services segments. Just in thed US$ 5.4 billion abroad - the highest valuethis item began in 1947.

il

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain Sectors: AGRIBUSINESSSectors: AGRIBUSINESSSectors: AGRIBUSINESSSectors: AGRIBUSINESS

OverviewOverviewOverviewOverviewCurrently, the agribusiness sector in Brazil represenNational Supply Council (Conab) is forecasting a recoin 2009.

The IBGE reports agricultural GDP increasing by 2.1and 11.4% comparing second quarters 2009 and 201

Agricultural growth reflects two factors:

- increased productivity and performance of

such as soybeans (19.8%), coffee (13.2%), c- the reduction in fertilizer and pesticide price

Employed and Unemployed General Registry (CAGEDagricultural sector rising from 128,874 in numbers of2010.

However, a shortage of qualified labor is a problem,development are rewarded with more attractive salincreased by 27% from January 1999 to June this yea

HighlightHighlightHighlightHighlightAs the largest producer and global exporter of sugarcrop in 2010, a year on year increase of 7.8% accordi

Over half of the sugar cane crop this year (54.9%) isbillion liters, while the remainder (45.1%) will be tramillion tons will be consumed domestically.

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The agribusiness sector businessAlcohol subsectors, grew by 383383383383

Point of ViewPoint of ViewPoint of ViewPoint of View

The recovery of international coof a substantial number of new cagribusiness production chain.

ource: IBGE, Companhia de Abastecimento Nacional CONAB; Cadastrgricultura, Pecuria e Abastecimento MAPA; media: O Globo, Portal d

Gino OyamadaGino OyamadaGino OyamadaGino OyamadaManaging [email protected]

s 26% of GDP and 42% of Brazilian exports. Therd grain crop - 6.5% more than the 143 million tons

in the second quarter versus the first quarter 20100.

ertain crops harvested in the second quarter 2010

rn (4.4%) and cotton (202%).s.

) data shows increased formal employment in thenew hires in the first half of 2009 to 175,050 in June

nd those who invest in their own professionalries. The initial remuneration in agriculturer.

and ethanol, Brazil will report a 651.51 million tong to Ministry of Agriculture forecasts.

estined for the ethanol market, equivalent to 28.4sformed into 38.1 million tons of sugar of which 11

, represented by the Agriculture and Sugar andin revenue compared to the first half of 2009.

modities prices and the insertion in the economynsumers have contributed to the growth of the

o Geral de Empregados e Desempregados CAGED; Ministrio dao Agronegcio, Valor Econmico.

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain Sectors: AUTO INDUSTRYSectors: AUTO INDUSTRYSectors: AUTO INDUSTRYSectors: AUTO INDUSTRY

OverviewOverviewOverviewOverviewCurrently Brazil is the fourth largest automotive marmillion vehicles sold in the first eight months of 2010

August was the second best month in the history of tincluding trucks and buses and behind only March, tProducts) tax break applied, with 353 700 units. In co21.1%.

expects to generate over 250 thousand jobs this year.132,160 new jobs created including the agriculturalsame month last year

Second quarter 2010 GDP for the automotive industrreleased by the IBGE. In 2009, the sector accounted fis expected to grow to represent approximately 6.8(cars and light commercial vehicles) and a 9% incre

In 2006 the average price paid per vehicle was R$ 29,to R$ 37,500 on average. "The Brazilians are seeking

emissions says Fords global chairman. Under suchinvest in development.

According to Fords chairman, Brazil is currently themarkets. Thanks to the tax breaks introduced by theenabling the country to recover from the crisis faster

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First half accumulated revenue frlargest variation among all sectorcompared to the same period last


The strength of the domestic maemerging market countries to estdevelopment platforms by globalresults along the entire value cha

urce: IBGE (Instituto Brasileiro de Geografia e Estatstica); Fenabrave (ssociao Nacional dos Fabricantes de Veculos Automotores) ; Portal

Aline ZimmermanAline ZimmermanAline ZimmermanAline ZimmermanManaging [email protected]

ket in the world with accumulated balance of 2,194, up 10% compared to the same period of 2009.

e industry with sales of 312,800 new vehicles,e last month when the IPI (Tax on Industrialized

mparison with August last year, the increase was

The sector ended July with an aggregate ofmachinery subsector - 10.5% up in relation to the

increased 1.9% year on year according to datar 4.7% of Brazilian GDP. For this year, the industrywith a sales increase of 7.4% for light vehiclesse in unit output.

200. In 2009 consumer investment in autos jumpedgreater safety, comfort, efficiency and reduced

a scenario, the time is right for sector players to

enter of the world as one the fastest growingLula administration, sector sales were boostedthan would have otherwise been the case.

m automotive sector business reported thes in the company registering a growth of 611%611%611%611%year.

rket an the election of Brazil as one of the keyablish and expand manufacturing an new productOEMs, decisively contributed to these significantin.

Federao Nacional da Distribuio de Veculos Automotores); AnfaveaExame

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OverviewOverviewOverviewOverviewCivil construction, an area of many and varied activitiengine of economic growth creating wealth and jobs.

It is one of the main sectors of the economy represeagribusiness. CBIC (Brazilian Chamber for the ConsGDP growth at 9% for 2010.

The investments for the Minha Casa, Minha Vida (

BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain Sectors: CIVIL CONSTRUCTSectors: CIVIL CONSTRUCTSectors: CIVIL CONSTRUCTSectors: CIVIL CONSTRUCT

,

Soccer Tournament will ensure sector growth exceeestimates, GDP in the construction industry will gro

The sector should be responsible for the creation of 1Industrial Engineering and Construction Associationjobs in the coming years thanks to the run up to the


Dieese (the Inter-Labor Union Statistics and Socio-Einvestments in programs such and Minha Casa, Min

the World Soccer Tournament in 2014 and the Rio Olgrowth going forward. Sinduscon-SP data indicates t

Getlio Vargas Foundation (FGV) indicates that investin the current year. Investments in real estate shouldWorld Soccer Tournament alone will inject at least R

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Company revenues from the Infraa growth of 148%148%148%148% in the period frolast year.


Brazil's infrastructure boom is ccurrently making the country one

as executives.Aline ZimmermanAline ZimmermanAline ZimmermanAline ZimmermanManaging [email protected]

ource: Departamento Intersindical de Estatstica e Estudos SocioeconCAGED); Sindicato da Construo Paulista (Sinduscon-SP); Associaoonstruo (CBIC); United Nations Conference on Trade and Developm

s throughout the country, acts as an important.

ting about 16% of GDP, ranking second only toruction Industry) estimates construction industry

y home, my life) lifehousing program and the PAC

IONIONIONION

s 6% per year through 2012. According to6.7% in 2011 and 6% in 2012.

80 thousand formal jobs in 2010. Braziliandata suggests that the sector will create 3.5 million014 World Soccer Tournament.

onomic Studies Department) expects sectorha Vida housing and construction in readiness for

mpics in 2016 should ensure strong employmentat investments reaching 20% of GDP in 2010.

ments will grow from R$ 476 billion to R$ 625 billionrise from R$ 170 (2009) to R$ 202 billion. The$ 155.7 billion into the Brazilian economy.

structure and Civil Construction sectors recordedm January to July compared with the same period

eating investment opportunities along the chain,of the hottest spots globally for investors as well

micos (Dieese); Cadastro Geral de Empregados e DesempregadosBrasileira de Engenharia Industrial; Cmara Brasileira da Indstria dant(Unctad)

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain SectorsSectorsSectorsSectors: CONSUMER GOOD: CONSUMER GOOD: CONSUMER GOOD: CONSUMER GOOD

OverviewOverviewOverviewOverviewA growing middle class and easier access to credit hpercent of GDP. The taming of hyperinflation has redaffordable.

The purchase of televisions, refrigerators and other cuntil recently but has now become a reality.

The middle-class consumption theme will play out o- -, , ,

starting growth in construction, building materials aintroduction of the 30-year mortgage, a significant degovernment subsidies for low-cost housing have cowhen salaries are increasing.

FGV research indicates that turnover in the consumehigher in 2010 than 2009, above the general average

The Brazilian Food Industries Association (ABIA) forefigure for 2008 or approximately US$ 33.3 billion. In treported a year on year increase in sales of 5.3%.

The beverage industrys forecasts for consumption aWorld Soccer Tournament in June-July 2010

Some examples to illustrate the growth of consumptisales of 6.4 million TVs between January and June 2Brazilians will purchase about14 million PCs in 2010,largest computer market in the world, behind only th70% in the second uarter of the ear; ear-end holiturnover of about R$ 98 billion in 2010.

FesaFesaFesaFesa

The consumer goods sector, morrepresenting respectively 42.47%revenue compared to the first half

PointPointPointPoint ofofofof ViewViewViewView

The so-called middle class in Br

ranking the country among the tosegments. Irrespective of supplyicompanies must have a foot in Brconsolidated in the sector) or sta

ource: CFA Magazine, Associao Brasileira das Indstrias da Aliment

Denys MonteiroDenys MonteiroDenys MonteiroDenys MonteiroManaging Partner

[email protected]

ve propelled domestic consumption to around 60ced interest rates making consumer credit more

onsumer durables on credit was almost impossible

er many years and touch many sectors, notably-.

d other construction-related industries. Thecline in interest rates in the past five years, andbined to produce lower monthly payments at a time

r industry such as food and beverages will be 10.6%or industry.

casts that in 2010 exports will be at or near thehe first six months of this year the food industry

e even stronger thanks to stronger sales during the

on in general: the electronics segment reported10, 75% more than the same period in 2009;an all-time record, in 2011 making Brazil the third

e United States and China; smartphone sales grewa consumer oods sales are ex ected to re ort

particularly the Food & Beverages subsectors,and 14.6% of revenues of the total, grew by 79%79%79%79% inof 2009.

zil represents more than half of the population

10 markets in the world for most of theg lower income or luxury brands, globalzil either through acquisitions (much still to be

t-ups.

o (ABIA), Fundao Getlio Vargas (FGV), Isto

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain SectorsSectorsSectorsSectors: ENERGY: ENERGY: ENERGY: ENERGY

OverviewOverviewOverviewOverviewAfter years of difficulties in planning and organizing twhere it is able to anticipate demand and create a mgeneration and distribution in Brazil.

In the words of the chairman of the Energy Researchsuperpower, not only as a result of the pre-salt hydrand the immense reserves of hydropower and other

the "renewability" of the energy matrix and the produmatrix is made up of renewable sources, thus rankin

Data published by EPE indicates consumption in BraGeneral of Itaipu Binacional says that this acceleraticlasses which now have the disposable income to puA and B classes only.

In the context of the energy sector, the oil and gas suto an ONIP study on the development of the productiexpected to generate approximately 400 thousand jo

The EPE estimates that the Brazilian energy sector2010 and 2019 if it is to meet expected annual demanwill be invested in electricity supply infrastructure, ofin transmission. The oil and natural gas will get anotbillion, going to exploration and production. A furtheranother $ 15 billion. Biofuels will receive $ 66 billionEthanol segment accounts for an estimated R$ 58 bilabsorb a further $ 7 billion and biodiesel, R$ 500 mil

FesaFesaFesaFesa

Energy sector sales, which includrevenue compared to the first half

PointPointPointPoint ofofofof ViewViewViewView

The energy business has grownand the development potential al

currently pervades the energy se

ource: Empresa de Pesquisa Energtica (EPE), Exame, Valor

Fernando LohmannFernando LohmannFernando LohmannFernando LohmannManaging [email protected]

he energy sector, Brazil moving towards a positionre reliable and predictable system both for

Company (EPE), "Brazil is already an energycarbon reserves, but also the production of ethanolenewable energy sources.

ction of ethanol. Currently 47% of Brazils energyit well above world average of 14%.

il increasing at an annual rate of 7%. The Director-n in consumption reflects the rise of the D and E

rchase home appliances, previously the privilege of

b-sector is certainly the more prominent. Accordinge chain, in a worst case scenario the subsector iss over the next ten years.

ill receive investments of R$ 951 billion between5.4% in consumption. Of the total, R $ 214 billionwhich R $ 175 billion in generation and $ 39 billion

her R $ 672 billion, the bulk of which, R $ 506R $ 151 billion will go to the oil products and others

in investments between 2010 and 2019 and thelion. Investments in pipeline infrastructure willlion.

the Oil and Gas subsector, grew by 101%101%101%101% inof 2009.

ignificantly mainly due to the pre-salt discoveriesng the sectors entire value chain. Great optimism

tor and prospects look very favorable.

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain SectorsSectorsSectorsSectors: FINANCIAL: FINANCIAL: FINANCIAL: FINANCIAL

OverviewOverviewOverviewOverviewThe Brazilian financial system has been an examplethe need for government bail-outs, contrary to US anused to save their financial institutions.

A study by a specialized consultancy shows that thequarter among all sectors of the Brazilian economy.equivalent to 22.6% of the total profits recorded in th18.4% over the second quarter of 2009.

The data also shows that the net profit of the three mUnibanco and Bradesco, which together now account420% in 15 years. Since 2003 the first year of the Laggregate profits of R$ 167.471 billion against R$ 32.administration*.

The Survey of Banking Employment conducted by Cbanking sector generated 9,048 jobs in the first half cwas an absolute decline of 2,224 jobs (formal jobs).

The significant growth occurred both because of the

months of last year, the country was still experiencinand also the high labor turnover promoted by the ba

On the other hand, in spite of the increased labor turthan those whose contracts were terminated in the sperformance in job creation with 6,713 new posts.

Although the industry opened up new vacancies in thof 1.47 million of new em lo ment ositions created

FesaFesaFesaFesa

The financial sector is still recoverate in the company, showed an iperiod last year.

PPPPointointointoint ofofofof ViewViewViewView

The unique moment experienceattention of the entire FS commucurrent situation overseas.

ource: Contraf-CUT (Confederao Nacional dos Trabalhadores do RaDepartamento Intersindical de Estatstica e Estudos Socioeconmicos),o Grande ABC

Renata FabriniRenata FabriniRenata FabriniRenata FabriniManaging Partner

[email protected]

o the world in maintaining its robustness avoidingd Europe where vast sums in public funds were

anking sector was the most profitable in the secondhe 25 banks assessed grossed R$ 10.1 billion,market. The figure corresponds to an expansion of

ajor groups of the country - Banco do Brasil, Itafor a market share of almost 80% - jumped nearlyla administration - these institutions recorded262 billion during the previous Cardoso

NTRAF-CUT and Dieese indicates that the Brazilianompared with the same period in 2009 when there

epreciated basis of comparison - in the first six

g the impacts of the international financial crisis king institutions.

over, the salaries of new hires was 38.04% lowerame period. The Southeast region reported the best

period, these represented just 0.61% of the totalin the Brazilian econom as a whole.

ring and in spite of posting the smallest growthcrease in sales of 28%28%28%28% compared to the same

by the Brazilian economy is attracting theity which is investing locally regardless of its

*values correctedby IPCA.

o Financeiro da Central nica dos Trabalhadores), DieeseConsultoria Economtica; Veculos: AE Agncia Estado, O Globo, Dirio

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain SectorsSectorsSectorsSectors: LIFE SCIENCE: LIFE SCIENCE: LIFE SCIENCE: LIFE SCIENCE

CosmeticsCosmeticsCosmeticsCosmeticsCurrently, Brazil is the third largest market in the world fand Japan and ahead of European countries such as Fran

According to ABIHPEC (Brazilian Toiletry, Perfumery andgenerating 3.6 million jobs in Brazil and generating salesgrowth of 14.7%. For the first six months of 2010, the sectfor the whole of 2009. Unlike Brazil, which was unaffecteresults.

Ignoring economic difficulties elsewhere, the domestic in

in 2010. This reflects improved incomes and the consumpThe Brazilian cosmetics industry will also receive a boost

PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticals

Sales revenue from the pharmaceutical sector in Brazil s2.22% expansion in sales volume, according to a study byof pharmaceuticals will reach 1.81 billion units in 2010.

Stability in the Brazilian economy has expanded access to

drugs. Moreover, the Brazilian market has also been drivdrugs are forecast to lose their legal protection by 2010.generics and estimates point to an explosion in turnoverpatents on branded drugs either expire or are broken. Inin Brazil compared with less than 10% five years ago.

With the prospect of strong business expansion in comingsecure a larger share of the Brazilian pharmaceutical drumore than R$ 3 billion this year, half of which directed to

ource: ABIHPEC (Associao Brasileira da Indstria de Higiene Pessoaarmacuticos de So Paulo (Sindusfarma), Consultoria Lafis

FesaFesaFesaFesa

The Life Science sector, which includimproved sales of 57%57%57%57% compared to t

PPPPointointointoint ofofofof ViewViewViewView

Brazil is among the top three countroperation in Brazil and strong, well-emarket the segment is expected to gris a market where there are excellenincrease.Most companies in the pharmaceutic

their operations in Brazil. There is su170 pharma companies operating) anthe generics market. In the devices aplants, newcomers, etc), also boostin

Denys MonteiroDenys MonteiroDenys MonteiroDenys MonteiroManaging Partner

[email protected]

r cosmetics and perfumery surpassed only by the USce, Germany and the UK.

Cosmetic Association),the sector is responsible forrevenues of R$ 24.97 billion in 2009 alone - a recordor reported new product launches equivalent to thoseby the crisis, the worldwide sector reported lackluster

dustry is expected to report a growth of more than 30%

tion of new products by the C and D social groupings.with the arrival of strong new players to the market.

ould grow 9.19% this year to R$36.74 billion, driven by aLafis consultancy. The survey shows that sales volume

healthcare plans and the purchase of pharmaceutical

n by the prospect of the breaking drug patents. About 30he end of patents will encourage the production ofy an additional R$ 900 billion between 2010 and 2012 as009, generics contributed 15% to total laboratory sales

years, national and foreign groups are competing tog market. Forecasts are that the industry will investcquisitions alone.

l, Perfumaria e Cosmticos, Sindicato da Indstria de Produtos

s the subsectors Cosmetic and Pharma, registerede period January to July 2009.

es in the cosmetics segment due to a huge door to doortablished multinational brands. Although a mature

ow at double-digit rates over the next five years at least. Itprofessionals to be found and salaries are on the

l business have reached global status due to the size of

stantial scope for consolidation (there are approximatelyvery strong domesticall -owned companies compete in

eas there is a large inflow of new investments (newcompetition for good talents.

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWMainMainMainMain Sectors: TELECOMMUNICASectors: TELECOMMUNICASectors: TELECOMMUNICASectors: TELECOMMUNICA

OverviewOverviewOverviewOverviewThe post privatization period was characterized by inmarket concentration on certain economic groups anindicators of industry development when compared

In the first quarter of this year, gross operating revenbillion in the same period last year. In 2009, gross anequivalent to 5.7% of GDP.

2010, 2.5% higher than in the same period last year,Increasing by an annual rate of 50%, the Brazilian brgrowing in the world. The telecoms regulator, Anatemillion internet accesses via cellular and fixed netwreached 272 million - currently estimated at 160 milli


IPEA (Applied Economic Research Institute) forecastreach R$ 67 billion between 2010-2013, most of it to

broadband.

This forecast is for the private sector only and exclud2014 by the federal government in implementing the

Investments by telecoms services sector from Januaand improvement in service quality totaled R$ 2.4 bilsector were R$ 177 billion.

FesaFesaFesaFesa

Ranked second among the sectorgrowth in the first half of the year,about 481%481%481%481% over the same period


Telecoms companies are facingBrazils current economic situati

consolidation and aggressive compreventive measures to preservereinforcing their teams in order t

ource: IPEA Instituto de Pesquisa Econmica Aplicada; ANATEL Agrabalhadores em Telecomunicaes no Estado de So Paulo; Anurio Eemporais - Associao Brasileira de Telecomunicaes (Telebrasil) in

Ana Luiza SegallAna Luiza SegallAna Luiza SegallAna Luiza SegallActing Partner [email protected]

IONSIONSIONSIONS

reased access to telecommunications services,d the ranking of Brazil according to differentwith the rest of the world.

ue increased 4.8% to R$ 45.6 billion from R$ 43.5ual operating revenue was R $ 179.9 billion,

,

hen 390,900 people were employed.oadband internet market is one of the fastestl, is forecasting that by 2018 there will be about 160rks, and the number of cell phones will have

ion.

investments in telecommunications in Brazil tobe invested in cellular network expansion and 3G

es approximately R$ 13 billion to be invested up toNational Broadband Plan.

ry to March this year in expansion, modernizationion. From 1998 to 2009, total investments in the

s covered by the company reporting the fastest, revenues from high tech business increased byin 2009.

challenging moment not only in the light ofn but also due to the continuous market

petitiveness. This has forced them to takearket share by investing in infrastructure and

provide superior quality services.

ncia Nacional de Telecomunicaes; SINTETEL SP Sindicato dosxame, O Desempenho do Setor de Telecomunicaes no Brasil - Sriespartnership with the consultancy, Teleco.

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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWHumanHumanHumanHuman ResourcesResourcesResourcesResources

EmploymentEmploymentEmploymentEmploymentEmployment in Brazil was not affected by the financiwhere the 500 largest corporations destroyed 821 th2009, sales in Brazil had started to pick up again andthey would have to do more with less. During 2009, nspecter of unemployment.

There were layoffs, but they were concentrated in cedirectly on the overseas market . The overall balance

Throughout the first half of the 2010, the Brazilian lacontributing to economic performance. Some 1,473,3according to the Ministry of Labor and Employment (period of 2009. Over the past 12 months, the increas

Infrastructure and civil constructionInfrastructure and civil constructionInfrastructure and civil constructionInfrastructure and civil construction:due to the expansion in new housing an

Manufacturing industryManufacturing industryManufacturing industryManufacturing industry: good perforgood performance of the footwear (11.7

Service sectorService sectorService sectorService sector: growth rate of 3.7%, rein absolute terms (490,000 new jobs inin the economy, one was in the service

The expectation is for the trend in the labor market tslowdown in economic activity is expected in Brazil tcurrent strong performance in job creation.

10.2%

5%

3.7%

By late 2010, Brazil will be close to achieving the lanworkers. Ten years ago, this was little more than 20

SalarySalarySalarySalary

In the private sector wages increa

There was a decreased in the Pub

8.3%

2.6%

ource: Alfredo Assuno: The Brazilian economy , the blackout of talentInstituto de Pesquisa Econmica Aplicada

l crisis to the extent that it has been in the USusand jobs in 2009 alone, a record. By the end ofit at this point that it dawned on companies thatthing haunted Brazils economy more than the dire

rtain sectors such as agribusiness which dependsfor employment in Brazil however, was positive.

.

or market continued to report good results, so20 jobs were created in the first six months

TE) and thus an increase of 4.5% over the samein jobs with a formal work contract has been 6.7%.

outstanding increase of 10.2% in new job creationd the Accelerated Growth Plan (PAC).

ance with a growth rate above 5%, reflecting the%) and metallurgy (7.3%) segments.

mains the largest segment in terms of job creation2010), which means that out of every three new jobssector

stabilize in the second half of the year. While someis should not be sufficient to detract from the

dmark figure of 34 million formally registeredillion.

ed by approximately 8,3%

ic sector, about 2,6%

and strategic hiring; Exame Special Issue -Melhores & Maiores | IPEA

18


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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWHumanHumanHumanHuman ResourcesResourcesResourcesResources

Qualification and the Talent BlackoutQualification and the Talent BlackoutQualification and the Talent BlackoutQualification and the Talent Blackout

By the second half of 2009 we were already able seei

unscathed. And the period when we felt some degreourselves for 2010.

Everybody believes in Brazil and wishes us well. At tmoment investments in Brazil will continue into tdifferent. Clearly, there is a lack of human infrastrucan grow without adequate educational standards an

We lack leaders and human capital in the form of tecmedium term to the demand that we have for produeducation now.

With the creation of 2 to 2.5 million formal jobs in 201business: finding qualified people - or at least thoseis needed in the workplace.

According to the vice president of the So Paulo Indusame as South Korea did in the sixties: to acceleratethe responsibility of taking action to raise the level ofengineers and other skilled professionals to meet th

Its time to invest heavily in education at all levels, frexisting ones, this includes the establishment of othjustify the further investments that will naturally arri

Thus, the successful companies will be those able toand at the same time attract new talent in other locasocial role. There is no other way. Educate to survive.professional to solve other blackouts.

o surv ve ese mo ern mes every company n rawith a human capital plan that permits the replace

The command of the business world belongs to thoshuman capital. The best human capital will not be foover from previous selection processes or from sponcompany in search of employment. Nor are they founprofessional does not offer him/herself or answer ad

Strategic partnerships with external consultants in eto acquire in due time, the human capital to maintainroute the likely result is losses, the company fallingas either the acquired or merged party.

Along with many other bottlenecks, lack of skilled lagrowth in a country continuing to live the employmeand on the other, workers seeking work but unsuite

ource: Alfredo Assuno: The Brazilian economy , the blackout of talentstituto de Pesquisa Econmica Aplicada

ng that the crisis had left Brazil relatively

of impact gave us breathing space to prepare

e end of this decade the economic matter of thee next and there is no way in which it could be anyture to support all these investments. No country

d Brazil has limits its sustainable growth rates.

hnical managers who will respond in the short andts and services. We need to start investing in

0, one question becomes increasingly critical toith a basic education allowing them to learn what

tries Federation (Fiesp), "Brazil needs to do thetechnical trainin . To the next president will falleducation and expand the training of technicians,increasing demand from Brazilian companies.

m primary to higher education. In addition toer top business schools for MBAs if we are to fullyve.

retain, develop and motivate their existing talentand international markets. Brazil has to fulfill itsWe are all dependent on the talent or skilled

z w nee o ave an exce en eam o peop eent of any key player from its human resources.

e who have the greatest competence in managingnd in the databases of candidate compounds leftaneously received rsums submitted to thed through placing ads in print or online. A goods. We need to know how to find him/her.

ecutive search will be necessary if the company isor increase its profitability. If it does not take thisn easy prey to the mergers and acquisitions game

or can quickly place a severe limit to the speed oft paradox: on the one hand, millions of job openings

d to take up the employment vacancies available.

and strategic hiring | Exame Special Issue Melhores & Maiores | IPEA

19


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Who We AreWho We AreWho We AreWho We AreFesaFesaFesaFesa was founded in 1995 as the first Brazilian executhe financial sector. After a few years, its competitiveposition in the industry. Today Fesa provides servicesboutiques. This organization brings in-depth knowle

Nowadays, Fesa is the largest Brazilian company in tsearch firm in the Brazilian market.

'

BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWAboutAboutAboutAbout UsUsUsUs

,

we operate through a partnership with IIC Partners, t61 offices in 41 countries.

TheTheTheThe GroupGroupGroupGroup

The group owns three companies which operate in th

Fesa is specialized in Exe

Asap, created in 2009, opfocused on middle manag

Doers consultancy, recenEvaluation, Executive InteDevelopment, Strategic C

tive search firm providing services exclusively foradvantages saw the company attain a leadingto all sectors of the economy through exclusivege of clients and all their issues and concerns.

he industry and currently the leading executive

.

he eighth largest global search organization, with

e executive search market.

utive Search for C Level positions;

rates in the market for Executive Recruitmentement;

ly launched, offering services such as Marketgration, Management Model, Conscious Leadershiporporate Governance and Compensation

20


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BRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWBRAZIL OVERVIEWAboutAboutAboutAbout UsUsUsUs

OurOurOurOur NumbersNumbersNumbersNumbers Increase of 1,500% in revenue in US$ ,

over 7 years thanks to the quality of our

processes

Around 85 executives placed in 22 countries;800 senior management executivesand more than 1700 middle management in Brazil

CLevelCLevelCLevelCLevel

7%

18%

9%

8%

24%

2%

12%

10%

3%7%

Projects by sector2009 - 2010 (Jan - Aug)

Life Sciences

Consumer & Retail

Professional Services

High-tech

Financial Services

Automotive

Civil Construction / Engine

Energy

Mining

Other Industries

SeniorSeniorSeniorSenior MiddleMiddleMiddleMiddle ManagementManagementManagementManagement

15%

26%

5%13%

16%

3%

7%

8%

2% 5%

Projects by sector2009 - 2010 (Jan - Aug)

Life Sciences

Consumer & Retail

Professional Services

High-tech

Financial Services

Automotive

Civil Construction / Engine

Energy

Mining

Other Industries

FesaFesaFesaFesa

AsapAsapAsapAsap.

ering

10%

36%

2%6%

16%

7%

2%

4%

17%

Job position2009 - 2010 (Jan-Aug)

Engineering

Finance

Legal

Marketing

Others

Human Resources

Supply Chain

High-tech

Sales

ering

9%

29%

3%

12%5%

10%

8%

7%

17%

Job Position2009 - 2010 (Jan-Aug)

Engineering

Finance

Legal

Marketing

Others

Human Resources

Supply Chain

High-tech

Sales

Documents

Brazil Overview 2010