Understanding the Brazilian MarketLet the U.S. Commercial Service connect you to a world of opportunities.

Steve KnodeDeputy Senior Commercial Officer

WHY BRAZIL?

Brazil at a Glance

Size: 3.3 million sq miles Population: 201 million GDP (USD):  $2.3 trillion

7th largest economy, 5th largest by 2015 GDP per capita (USD) around $11,462

Why Brazil?

• Almost 200 million consumers with increased purchasing power

• Represents half of the economy of Latin America• Per capita income 45% higher than China and a growing

consumer class• Weathered financial crisis better than most markets• Huge infrastructure and energy investments• Hosting 2014 World Cup and 2016 Olympic Games• Massive pre-salt offshore oil and gas deposits

Snapshot of Economy

GDP Growth Inflation Rate

Unemployment Rate

Source: IMF

5.90% 6.50%4.60%

2010 2011 2012

6.70%

5.90% 5.84%

2010 2011 2012

Macroeconomic Stability

The Plano Real implemented in 1994 finally corrected Brazil’s persistently high inflation

Following the end of a currency peg and sharp devaluation in 1999, the Brazilian government adopted a trio of macroeconomic policies:– Inflation Targeting– Floating Exchange Rate– Primary Surplus Target

These policies have now survived two changes in administration

Inflation Is Under Control

0%

500%

1000%

1500%

2000%

2500%

3000%

Annual Inflation

Source: IBGE

The New Normal

0%

2%

4%

6%

8%

10%

12%

14%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Annual Inflation

Source: IBGE

Steady Growth

‐1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Real GDP Growth

Source: IBGE

Outlook In Uncertain Future

CONSULATE GENERAL SAO PAULO

2.72.52.73.2

3.83.94.04.14.14.14.14.03.9

2011 2015 2019 2023

Advanced Economies Rebound

Regional DisparitiesGDP in terms of countries ‐ 2011

Source : The Economist: Comparing Brazilian states with countries

Regional Economic Distribution

North 5.3%

Center-West 9.3 %

South 16.5 %

Southeast 55.4 %

Northeast 13.5%

% of National GDP; Source:IBGE

What drives the economic growth?

1. Expanding middle class

Brazilians Moving Into The Middle Class…

What drives economic growth?

2. Abundant natural resources

Pre-Salt Reserves

The New Frontier: 100 Billion Barrels?  A 500‐mile wide area in Brazil, located under a thick layer of salt ‐‐ 350 miles off of Brazil’s southeastern coast in an average depth of over 7000 feet.

What drives economic growth?

3. Infrastructure Development

DEMAND FOR INFRASTRUCTURE

Source: National Agency for Aviation, National Agency (ANAC)for the Aquatic Transportation (ANTAC), Brazilian Association of Highway Concessionaires (ABCR) AND Brazilian Association of Automotive Vehicle Manufacturers (ANFAVEA).

BRAZIL – TRANSPORTATION Investment ProgramsSeveral major infrastructure programs were announces over the last two years adding around USD 230 billion over the coming years, not to mention the major urban infrastructure works required for the 2014 World Cup and 2016 Olympics

Source: national Logistics & Planning Company (EPL) and Ministry of Finance

World Cup 2014 & Olympics 2016: Business Opportunities

• 12 Brazilian cities will host World Cup Games Jun-Jul 2014

• Rio de Janeiro will host South America’s first Olympic Games Aug- Sept 2016

• Will generate numerous trade and investment opportunities in several areas

Hosted by 12 Cities Nationwide

Infrastructure: US$ 51 billionStadiums:US$2.7 billionAirport renewals: US$3 billion-------------------------TOTAL:US$56.7 billion

What will the Committee Purchase?

• Temporary Construction for Sporting Events

• Transportation – Buses, Vans, Private Cars

• Materials and Services for Sporting Events

• Contracted Services• Catering• Mobile Equipment• IT• Marketing/Branding for Games

• Software• Marketing Services• Sports Management Systems• Cleaning and Laundry Services• Video and Broadcasting Equip• Portable Office Equipment• Other

– Sporting Equipment– Installation Equipment– Cruise Ship Accommodations– Radio Com. Equipment– Public Relations– Marketing Materials

U.S. – Brazil Bilateral Trade169% growth in ten-year period.

28.2

75.8

15.8

32.1

43.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Bil

lion

s of U

S$

Total Trade

Imports

Exports

12.4

15th 7thBrazil’s ranking as a U.S. Export Market

1.8% growth in 2012

Source: Census Bureau, U.S. DOC / Global Trade Atlas

U.S. – Brazil Trade in Services330% growth during ten-year period, reaching US$ 29.5 bi

6.9

29.5

5.1

22.6

1.7

6.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Bill

ions

of U

S$

Total Trade

Exports

Imports

330 %

339 %

302%

U.S. Services trade balance with Brazil has continually increased since 2003, reaching $15.7 billion in 2012.

Bureau of Economic Analysis, USDOC

• Unprecedented growth in Brazilian investment in the United States since 2005

• For every US$2.00 the United States invests in Brazil, Brazil invests US$1.00in the United States

• Since 2008, major Brazil FDI in the United States includes:– Gerdau – JBS– Cutrale– Coteminas– Embraer

Growing Brazilian Investment

CONSULATE GENERAL SAO PAULO

U.S. Exports to Brazil: $43,7 bi in 2012253% growth during ten-year period

Leading Sectors

Source: TradeStats Express, USDOC

Top Five States Exporting to Brazil(in millions of US$)

Source: Global Trade Atlas