Department of Trade and Foreign Affairs · Department of Trade and Foreign Affairs. Represents 131 sector business associations which stands for about 130.000 state and national firms

BRAZILIAN ECONOMICOVERVIEW

DEREXDepartment of Trade and Foreign Affairs

Represents 131 sector business associations which stands for about 130.000 state and national firms

42 regional offices throughout the state which represents about 10.000 associated firms

Think tank specialized in industrial issues

INDUSTRY SYSTEM

BRAZILIAN ECONOMY OVERVIEW

Roberto Simonsen Institute

INDUSTRY SYSTEM

171 technical schools and almost 800.000 students registrations

172 basic schools and more than 500.000 children. youth. adults and elderly people


Provides industrial employee’s families with social services. mainly education. culture. sports and health

Promotes professional education through technical schools providing qualified workforce to the industry

Aviônicos – Mobile School

Federation of Industries of the State of São Paulo

Regional Action

Human Capital

Competitiveness and Technology

Economy

Entrepreneurship

Infrastructure and energy

Foreign Affairs

Legal Division

Environment

Small and Medium Companies

Union and Labor Issues

Social responsibility

DEREX

• FOREIGN RELATIONS. TRADE AND INVESTMENT PROMOTION;

• INTERNATIONAL NEGOTIATION AND TRADE ECONOMIC RESEARCH;

• TRADE REMEDIES;

• TRADE FACILITATION;

• CERTIFICATE OF ORIGIN;


SCOPE

Brazilian Economic Growth drivers in the first decade of the 2000s

Macroeconomic Balance: fiscal balance. stable inflation and trade surplus;

Social Inclusion: credit and wage growth;

Foreign Trade: agricultural and mineral commodities well performed;

Infrastructure: renewable resources as base for the energy matrix;

The Economist cover on September the28th, 2013.


9.0

2.9

8.77.9

14.1

9.2

13.512.8

15.8

13.2

15.514.9

Brazil China Latin America and theCaribbean

World

GDP per capita, PPP (current international $)(1.000 US$/year)

2000 2010 2014Source: World Bank


Brazil | GDP per capita

Brazil| Agribusiness: position in global ranking

Source: USDA (March 2015); DEAGRO/FIESP


1º 1º 1º1º1º 1º 2º 4º

74% 46% 34%41%29% 21% 16% 8%

1º 1º 3º2º1º 2º 3º 4º

55% 27% 15%31%36% 17% 8% 3%

Exp

ort

sP

rod

uct

ion

Orange Juice Sugar ChickenCoffee Beef Soy Complex Corn Pork

1,5 3,6

53%

261%

Área (millhões de ha):

Produção (millhões de t):

3858

58

2099

0/9

1

91/

92

92/

93

93/

94

94

/95

95/

96

96

/97

97/

98

98

/99

99

/00

00

/01

01/

02

02/

03

03/

04

04

/05

05/

06

06

/07

07/

08

08

/09

09

/10

10/1

1

11/1

2

12/1

3

13/1

4

14/1

5*

Produtividade (t/ha): + 136%

8

Source: Conab (August 2015) and DEAGRO-Fiesp.(*) Note: estimate of Brazilian production for 2014/15

Brazil | Production of grains


Area (million hectares): + 53%

Production (million tonnes): + 261%

Productivity (tons/ha): + 136%1.5 3.6

Brazil | Trade Flow: main partners


Source: Ministry of Development. Industry and Trade(1) Main logistics hub of Europe

Country Part.

United States 23.7%

Argentina 11.9%

Germany 6.3%

Japan 4.9%

Italy 3.9%

France 3.3%

Netherlands 3.2%

United Kingdom 2.5%

Mexico 2.2%

Belgium 2.1%

Subtotal (top 10) 64.1%

Total 100.0%

2000Country Part.

China 17.2%

United States 13.7%

Argentina 6.3%

Germany 4.5%

The Netherlands 3.6%

Japan 2.8%

South Korea 2.7%

India 2.5%

Nigeria 2.3%

Italy 2.3%

Subtotal (top 10) 57.7%

Total 100.0%

2014

66.7 65.3 64.0 62.5

35.5

2011 2012 2013 2014 2015¹

Annual net inward FDI (US$ billion)

Main Investors 2015(jan-aug)

17.1%

16.0%

12.6%

5.2%

4.5%

NLD¹

USA

ESP

JAP

FRA


Source: Central Bank of Brazil

(1) Europe's main logistics hub(2) January to August 2015

Brazil | Foreign Investment

Brazil | Energy Matrix

Source: Brazil’s Mines and Energy Ministry(2014)


41%59%

Renovável Não-renovável

Nuclear Energy

Renováveis Não-renováveis

4%

8%

13%

16%

1%

6%

13%

39%

Other

Firewood

Hydraulic

Sugarcane

Mineral coal

Natural gas

Oil

Non-renewable Energy Renewable Energy

The Economist cover on September the28th, 2013.

In spite of the improvements in the past years, the obstacles to the productive sector persist.

Tax Burdencosts + bureaucracy

Labor Relationscosts + legislation

LaborSkilled Labor

Pension

Infrastructure:logistics + energy

Political System

Cost of capital

CUSTO BRASIL


5.7

3.2

4.0

6.0

5.0

-0.2

7.6

3.9

1.8

2.7

0.1

-3.0

-1.0

2.3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5¹

201

6¹

201

7¹

Annual GDP growth rate (%YoY)

Brazil | GDP Growth

Source: Central Bank of Brazil(1) Forecast: International Monetary Fund (IMF)


18.0 17.4 18.0

20.0

21.8

19.0

21.8 21.820.3

21.020.0

18.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹

Investment rate (Investment as % of GDP)

Source: International Monetary Fund(1) Forecast: IMF


Brazil | Investment (GFCF)

Source: Central Bank of Brazil; National Confederation of Industry (CNI)


Brazil | Cost of capital and Industry

14.25

74.5

75.5

76.5

77.5

78.5

79.5

80.5

81.5

82.5

83.5

6

7

8

9

10

11

12

13

14

15

% of total installed% change YoY

NUCI SELIC

Target interest rate (SELIC) and Industrial capacity utilization (NUCI)

19.8

%

19.9

%

20.0

%

20

.4%

21

.7%

22

.2%

23

.1%

23

.9%

23

.9%

25

.8%

26

.0%

26

.1%

26

.5%

27.1

%

29.0

%

30.4

%

30.4

%

30.4

%

31

.9%

32

.2%

Port

ugal

Au

stra

lia

Can

ada

Fin

lan

d

Ger

man

y

Net

her

lan

ds

Gre

ece

Un

ited

Sta

tes

Hu

nga

ry

Spai

n

Au

stri

a

Esto

nia

Cze

ch…

Slov

akia

Ital

y

Mex

ico

Fran

ce

Swed

en

Bra

zil

Bel

giu

m

Labor Benefits and taxes (% of total manufacturing labor costs)

Fonte: Bureau of Labor Statistics; Conference Board(2013)


Brazil | Labor

96.77

154.29

70

95

120

145

170

Industrial Production Retail Sales

Industrial production and Retail sales (2007=100)

Source: Brazilian Institute of Geography and Statistics (IBGE)


Brazil | Production and Sales

16.2 21.0 23.1 29.8

41.4 43.2

66.2

90.4 84.2 79.7 78.0

52.9

5.2 8.4 5.1 -9.2

-39.8 -36.5

-71.2

-91.8 -94.0 -104.3 -109.4

-60.7

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹

Trade balance by product categories(US$ billion)

Source: Ministry of Development, Industry and Trade (MDIC)(1) January to September 2015


Basic

Semi-Manufactured

Manufactured

Brazil | Trade Balance


Source: MDIC

Brazil | Exports agenda

Product Part.(%) Product Part.(%)

Airplanes 6.2 Iron ores and concentrates 11.5

Iron ores and concentrates 5.5 Soybeans,whether or not broken 10.3

Soybeans,whether or not broken 4.0 Petroleum oils 7.3

Passenger car 3.2 Raw sugar 3.3

Transmitter or receiver devices 3.2 Soybean bran 3.1

Soybean bran 3.0 Frozen chicken meat 3.1

Chemical wood pulp 2.9 Coffee beans 2.7

Coffee beans 2.8 Frozen beef 2.6

Footwear and its parts 2.8 Chemical wood pulp 2.4

Semi-finished products of iron or steel 2.5 Corn 1.7

Subtotal (top 10) 36.1 Subtotal (top 10) 47.9

Total 100.0% Total 100.0%

2000 2014

374.3

21%

10%

15%

20%

25%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹

0

100

200

300

400

500

600

Trade flow Openness of the economy

Economic openness of Brazil (US$ billion and % of GDP)

Source: MDIC(1) Forecast: FIESP and IMFNote: Openness of the economy is the ratio of country's total trade to the country's gross domestic product.


Brazil | Openness of the economy

33.844.9 46.5 40.0

25.0 25.3 20.129.8

19.42.6

-4.0

11.5

-50

0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹

Trade Balance Exports Imports

Brazilian trade balance (US$ billion)

Brazil | Trade Balance

Source: MDIC(1) Forecast: Fiesp – September 2015


0.75

1.76 1.581.25

0.11

-1.71-1.49

-2.2 -2.12-2.41

-3.62

-4.19 -4.05

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹

Current account evolution (as % of GDP)

Source: Central Bank of Brazil(1) Forecast: IMFNota: Current account consists of regular transactions with the rest of the world


Brazil | Current Account

180.3193.8

238.5

288.6

352.0

373.1358.8

368.2 361.4

2007 2008 2009 2010 2011 2012 2013 2014 2015¹

International reserves (US$ billion)

Source: Central Bank of Brazil(1) January to September 2015


Brazil | International Reserves

CHALLENGES FOR THE INTERNATIONAL INDUSTRY AGENDA

Proposals for the External Integration ofIndustry 2014

Regional Integration: MERCOSUR’s development and bilateral agreements with other Latin American countries (Peru, Colombia);

Extra-regional Integration: to reach agreements with countries with high technological development (United Stated, European Union e Japan);

Multilateralism;

Economic Partnerships: to develop policies of trade and investments with other countries;

Institutional Structure: to strengthen CAMEX’s role



1Market Access

2 Trade Promotion

3 Trade Facilitation

4 Trade Finance and Guarantees

5 Tax environment improvement

Source: MDIC

BRAZILIAN TRADE OPPORTUNITIES


Consumer Markets widening: removal of trade barriers and deeper connection to the world network of trade agreements

Build, consolidate, sustain Market share for exports

Simplification of Aduana laws and bureaucracy

Improvement of trade finance and guaranteesmecanisms, according to the exporters needs

Tax environment improvement to the exporteractivity (e.g.: REINTEGRA)

1

2

3

4

5

National Export Plan| Scope

Source: MDIC

52% 30% 8% 5% 5%

Road Railway Cabotage Waterway Pipeline

Brazil | Transport logistics

Source: Brazil’s Transport Ministry (2011)


Sao Paulo | Airline hub in South America


Brazil

Uruguay

Argentina

Chile

Paraguay

Bolivia

Peru

Ecuador

Colombia

Venezuela GuyanaSuriname

FrenchGuiana

Buenos AiresMontevideo

Panama

Sao Paulo

Brasilia

Santiago

La Paz

Lima

Quito

Bogota

Caracas

Asuncion

2h

4h

5h

6h

3h


Source: Brazilian Development Bank (BNDES)

INVESTMENTS INDUSTRY

Brazil |Investment Outlook

2010-2013 2015-2018

Oil and Gas 358 509 42.1%

Automotive 58 59 0.4%

Food 58 49 -15.8%

Mineral Extraction 44 40 -8.0%

Electronics 22 28 25.9%

Sugar and Ethanol 41 25 -40.5%

Chemical Industry 22 22 2.6%

Pulp and Paper 20 21 2.5%

Health Industry 12 13 11.9%

Steel 25 12 -50.3%

Aerospace Industry 4 12 187%

Others 112 121 8.0%

Total 775 909 17.3%

SECTORSR$ billion - 2014 Percentage

change


Source: BNDES

INVESTMENT IN INFRASTRUCTURE

Brazil |Investment Outlook

2010-2013 2015-2018

Telecommunications 102 141 37.8%

Social Infrastructure 53 87 64.6%

Roads 62 80 29.1%

Railroads 23 45 98.9%

Ports 15 36 141%

Airports 11 16 49.5%

Total 457 598 30.8%

SECTORSR$ billion - 2014 Percentage

change

Thank you!+55 11 3549-4635 / 4532

[email protected]

General DirectorThomaz Zanotto

Deputy DirectorsAntonio Fernando G. BessaEduardo de Paula RibeiroGeraldo HaenelJosé Augusto CorrêaMário MarconiniNewton de MelloVladimir Guilhamat


Documents

Department of Trade and Foreign Affairs · Department of Trade and Foreign Affairs. Represents 131 sector business associations which stands for about 130.000 state and national firms