ap cccc 09 (i)

Macroeconomic Scenario

March 9, 2012

1

2

Index

1. International Outlook

2. Domestic Outlook

Europe: new developments, more of the same?

3

1. The approval of the new aid package for Greece confirms our

perception:

� The European authorities’ strategy is to try and postpone

any potential collapse of the Euro Zone, until such time as

the financial system and the global economy can absorb

the costs of an event of this type in a “more orderly way;

2. And it is based on this perception that we are maintaining our

basic scenario of high volatility, although without any collapse

in the Euro Zone in the short term;

1.

2.

Europe: new developments, more of the same?

4

However, each day it becomes clearer that even with the European

Central Bank’s more aggressive actions (which have reduced the

risk of a banking crisis) the major question from this point onward

is how to actually get the region back on to a path of economic

growth;

However, we remain convinced that Greek is likely to leave the

Euro Zone at some later point;

Our perception is that the Northern European countries will try

and draw a line of defense around Portugal and Ireland.

3.

4.

5.

ECB’s Financing Operations

5

ECB’s offer of three year

financing (in billion Euros)

Credit growth(month versus same month year before – %)

Source: ECB. Produced by: MB Associados.

(800 banks) (523 banks)

-0,2

0,50,4

-9

0

9

18

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12

To the government

To other sectors

Total

530489

500

283

29/02 22/12

Funds borrowed Market's expectation

Central Banks – Asset growth

6

Source: Central Bank. Produced by: Central Bank

US$ 4.6 trillion (variation of 112%)

Total growth in the assets of the FED, ECB, BoJ and the BoE between 2008 and 2012

QE1 and

other FED

operations

US

$ B

ilio

ns

Purchasing Managers’ Index (PMI) - Industry

Source: Bloomberg/PMI Markit Survey. Produced by: MB Associados. N.B.: scores above 50 indicate growth and below this level contraction.

Germany France

Italy United Kingdom

50,0

30

45

60

Feb-09 Feb-10 Feb-11 Feb-12

51,2

30

50

70


47,8

30

46

62


50,2

30

50

70


Purchasing Managers’ Index (PMI) - Services

Germany France

Italy United Kingdom

52,8

40

52

64


50,0

38

48

58

68


44,1

35

48

61

53,8

35

50

65

Source: Bloomberg/PMI Markit Survey. Produced by: MB Associados. N.B.: scores above 50 indicate growth and below this level contraction.

USA: economy continues to recover

9

1. Most of the economic activity figures for the 1st two months

continue to come as a positive surprise;

Positive revision of the growth figures for income, salaries and

the savings rate for the 3rd and 4th quarters of 2011;

� Could the FED postpone further quantitative easing?

In this scenario, the dollar is likely to appreciate against the

Euro until the end of the year, and could get close to a level of

1.20 – 1.25;

Significant risk of a hike in petroleum and gasoline prices which

is partly offset by the renewal of the US automobile fleet

(greater energy efficiency);

1.

2.

3.

4.

USA: Revisions in the growth of income, salaries and the savings rate

10

0,8

2,6

3,2 3,2

0

3

6

9

12

2Q/10 4Q/10 2Q/11 4Q/11

Previous

Current

1,54,0

6,65,5

0

3

6

9

12

2Q/10 4Q/10 2Q/11 4Q/11

Previous

Current

3,93,7

4,6 4,5

3

4

5

6

2Q/10 4Q/10 2Q/11 4Q/11

Previous

Current

Income (quarterly annualized var. - %) Salaries (quarterly annualized var. - %)

Savings(% of disposable

income)

Source: BEA. Produced by: MB Associados.

USA: Industrial Activity Index

11

Source: Fed Richmond and Fed Philadelphia. Produced by: MB Associados. (positive values indicate growth)

*Industrial activity in the states of Pennsylvania, Delaware and part of New Jersey.

*Industrial activity in the states of Virginia, Maryland, North Carolina, South Carolina, the District of Columbia and part of West Virginia

Richmond Fed * Philadelphia Fed *

20,0

-50

-30

-10

10

30

Feb-08 Feb-10 Feb-12

10,2

-50

-25

0

25

50


USA: Industrial Activity Index

12

Source: Fed Dallas and Fed Chicago. Produced by: MB Associados.

Dallas Fed Chicago PMI Fed

11,2

-45

-25

-5

15

35


64,0

30,0

40,0

50,0

60,0

70,0


ISM: Industry and Services

13

57,30

52,40

30

40

50

60


ISM- Non Manufacturing

ISM- Manufacturing

Source: Institute od Supply ManagementPrepared by: MB Associados.

Note: Above 50 indicates expansion and below contraction.

USA: Domestic vehicle sales

14

11,7

5,0

7,5

10,0

12,5

15,0

Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12

Seasonally adjusted and annualized figures – millions of units

Source: Bloomberg - Production: MB Associados

USA: Domestic sales of vehicles by the major automobile companies

15

8,09,3

29,1

-50,0

-35,0

-20,0

-5,0

10,0

25,0


GM Ford Chrysler

Cumulative growth in the last 12 months - %

Source: Bloomberg - Production: MB Associados

USA: Growth in consumer credit

16

17,8

-30

-10

10

30

Jan-04 Jan-08 Jan-12

Absolute variation in relation to the previous month

Source: Federal Reserve. Produced by: MB Associados.

USA: New employment insurance requests

17

351356

340

380

420

460

500

Mar-10 Sep-10 Mar-11 Sep-11 Mar-12

New requests Avarage*

Source: Department of Labour. Production: MB Associados. * Moving 4-week average

Thousands of people

USA: creation of new job positions (ADP)

18

216

-800

-600

-400

-200

0

200

400

Feb-08 Feb-09 Feb-10 Feb-11 Feb-12

Absolute Variation in terms of thousands of people

Source: ADP. Produced by: MB Associados. Note ADP: Creation of new job positions in the private sector

USA: Creation of new job positions (ADP)

Source: ADP. Produced by: MB Associados.

Small

Large

Medium

10889

-31

-350

-175

0

175


8851

-46

-400

-200

0

200


203

-32

-150

-75

0

75


Increase in petroleum prices: will it disrupt the US recovery?

20

Price of Brent and WTI type

petroleum (US$ barrel)

Price of gasoline at the pump

(US$/barrel)

Source: Bloomberg. Produced by: MB Associados.

124,9

106,0

70

80

90

100

110

120

130

09/09/11 09/12/11 09/03/12

3,79

2,6

2,9

3,2

3,5

3,8

4,1

5/3/10 5/3/11 5/3/12

IEA Projections suggest tight oil market

21

Balance Supply and Demand (mb/d)

OPEC production required to

meet the demand:

30 mb/d (*)

OPEC Production (mb/d)

Source: IEA (Feb/12 Report). (*) Excluding OPEC production

NGLs of 6.3 mb/d. Projected demand based on estimated global

growth of 3.3% in 2012.

Produced by: MB Associados.

30,7

30,830,9

nov/11 dez/11 jan/12

Idle capacity OPEC (mb/d)

2011 2012 P

Demand 89,1 89,9

Supply 88,5

Non-OPEC 52,7 53,6

OPEC 35,8 - 2,00,4

0,4

0,3

0,2

0,2

0,1

0,1

0,1

Saudi Arabia

Nigeria

Iraq

Kuwait

Angola

UAE

Qatar

Venezuela

Iran

Total idle

capacity:

3.7 mb/d

Non-OPEC supply in the countries outside the OECD

22

Non-OPEC production

Countries outside the OECD

(mb/d)

Source: IEA (February 12 Report). Produced by: MB Associados.

Greatest absolute deviations

regarding that forecast for

2011 (in mb/d)

30,5

27

30

32

2005 2007 2009 2011

Actual Production

January Forecasts

29,8

0,01

-0,07

-0,09

-0,11

-0,14

-0,27

Europe

Middle East

FSU(**)

Africa

Latin America

Asia

Conflicts in the Middle East and Low Stocks: pressure on prices

23

Production of selected

countries (mb/d)Change in OECD Stocks

(in mb/d)

(*) Production should be in excess of 1 mb/d in 2012.

Source: IEA (February 10 report). Produced by: MB Associados.

3,6

2,7

2,2

0,7

0,5

0,3

Iran

Iraq

Nigeria

Egypt

Libya (*)

Syria

Total:

9.9 mb/d

4,2

-5,8

-1,7

7,4

-9,1

-1,8

Petroleum Petroleum by-

products

Total

Jan-nov/10

Jan-nov/11

USA

� Shale oil and gas exploration

has allowed the USA to become

a net exporter of petroleum by-

products;

� In addition to this, the country’s

energy dependence is

diminishing. In 2011, petroleum

imports came to a figure of

about 9 mb/d;

Observations about the petroleum and petroleum by-products markets: USA and Brazil

24

Brazil

� While in Brazil, every increase in

demand for petroleum by-

products has to be met by

imports;Petroleum and Petroleum By-

products balance (in US$ billion)

Source: Cbie and UBS. Produced by: MB Associados.

25

Index

1. International Outlook

2. Domestic Outlook

No surprises regarding the GDP results for the 4Q11

26

GDP from the Demand sideGrowth in relation to the preceding

quarter - %

GDP and Sub-sectorsGrowth in the 4Q11 in relation to the

preceding quarter - %

Source: IBGE. Produced by: MB Associados. (*) GFCF = Gross Fixed Capital Formation.

0,5

2,0

1,1

2,5

5,4

-0,1

-0,8-0,4

1,9

-0,5

1,1

0,4 0,2

1,8

2,6

Household

Consumption

Gov.

Consumption

Investiment Exports Imports

II III IV

-2,5

0,1

0,1

0,3

0,3

0,5

0,6

0,6

0,7

0,8

0,9

1,4

1,8

Transformation Industry

Transport and Storage

Prod.and Distr. of Eletricity

Public Administration

GDP

Other Services

Information Services

Real State Services and Rent

Commerce

Civil Construction

Agrobusiness

Finantial Services

Mineral Extraction Industry

Change in industry’s and sub-sectors’ percentage share of GDP

27

27,3

17,2

5,4

1,6

27,8

15,4

5,83,6

Industry Manufacturing Civil Construction Mineral Extractive

Average 2000/2001 Average 2010/2011

% of GDP at basic prices 2000/2011

Source: IBGE. Produced by: MB Associados. (*) percentage share of electricity, gas and water producers and distributors remained

stable at 3.2%.

Investment Rate and Gross Savings Rate

28

19,3

17,2

14

15

16

17

18

19

20

2002 2005 2008 2011

Investment Saving

Source: Ibge. Prepared by: MB Associados.

% of GDP

PAC: percentage of the Central Government’s expenditure and of GDP (%)

29

3,9

1,1

0,0

1,0

2,0

3,0

4,0

5,0

Jun-10 Dec-10 Jun-11 Dec-11

% of government expenditure % of GDP

Source: STN. Prepared by: MB Associados.

GDP – % growth

30

GDP at market prices 2,7 3,5

Production

Agriculture 3,9 2,8

Industry 1,6 3,1

Mineral Extractive 3,2 2,9

Transformation 0,1 1,4

Construction 3,6 5,3

Services 2,7 3,3

Expenditure

Government Consumption 1,9 2,1

Household Consumption 4,1 5,1

Investment 4,7 7,3

Exports 4,5 6,0

Imports 9,7 13,5Source: IBGE. Prepared by MB Associados.

2011 F 2012 F

Vehicle Production(variation Jan-Feb/12 vis-à-vis Jan-Feb/11 - %)

Change in the vehicle market

Vehicle Licensing Figures(variation Jan-Feb/12 vis-à-vis Jan-Feb/11 - %)

Source: Anfavea and Fenabrave. Produced by: MB Associados. Note: Stocks of trucks as at Feb/12 totaled 30 thousand units, which is equal

to almost two months’ production based on the monthly average for 2011.

-16

-18

-20

-47

-50

Light

Commercial

Vehicles

Automobiles

Total

Buses

Trucks

-4,5 -4,1

-0,5 -0,2

0,5

3,2

Road EquipmentTrucksMotorbikesAutomobilesLight Commercial VehiclesBuses

Total: 0 %

Anfavea: total stocks (factory and retail)

32

3636

14

21

28

35

42

49

56


Total Inventories

6-month moving average

Source: Anfavea. Prepared by: MB Associados.

Inventories (in days)

Anfavea: production and imports

33

300

440

580

720

860

1.000

2.600

2.800

3.000

3.200

3.400


Production Imports

Source: Anfavea. Prepared by: MB Associados.

12 month sum - in thousands

Production

Imports

Industrial Production(seasonally adjusted figures – index 2002=100)

Change in Industrial Production

Industrial Prod. by Usage Category(monthly variation, seasonally adjusted figures - %)

Source: IBGE. Produced by: MB Associados.

124,2

103

118

133

Jan-06 Jan-08 Jan-10 Jan-12

Industry

Annual average

General Industry -2,1

Capital Goods -16,0

Intermediate Goods -2,9

Consumer Goods -0,1

Durable -1,9

Non-durable 0,7

Categories of useJan-12

Dec-11

Diffusion index of growth of industrial production (in %)

46,1%

10%

30%

50%

70%

90%

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

Source: Bacen. Prepared by: MB Associados.

Note: calculated with the 76 sub-sectors of monthly physical industrial production of the IBGE and with the growth of the same month of the

previous year.

Industrial production by sub-setors (variation Jan/12 versus Jan/11 - %)


7,76,26,2

4,74,64,2

3,22,11,81,71,5

0,40,0

-0,4-2,8

-3,4-3,8-4,1

-4,5-5,6-5,7-5,9

-7,2-8,3

-10,0-19,4

-24,8-26,7

Timber

Other Transport Equipment

Perfumes, soaps & cleaning products

Foodstuffs

Machinery & equipment

Petroleum and alcohol refining

Tobacco

Other chemical products

Furniture

Publishing and printing

Non-metallic minerals

Pulp and paper

Electronic materials and communication equipment

Medical-hospital-optical equipment and others

Basic metallurgy

General Industry

Beverages

Rubber and plastic

Footwear

Textiles

Extractive industry

Pharmaceuticals

Metal products - except machinery and equipment

Sundry items

Electrical machinery, devices and materials

Apparel

Office machinery and IT equipment

Automobiles & vehicles

Lending to corporations slowed down in the margin

37

Real loans made(Base index Dec/05=100,

seasonally adjusted figures)

Source: Brazilian Central Bank. Produced by: MB Associados.0,7

-0,1

-0,4

-1,2

-4,7

-4,7

-6,3

-7,1

-8,1

-10,1

-17,5

-29,1

-30,0

Seller

Guaranteed Account

Discounts Promissory Notes

Import Financing

Total

Others

Advances on FX Contracts

Working Capital

Discounting of Trade Bills

Real Estate Finance

Acquisition of goods

Hot Money

External Onlending

Individuals: seasonally adjusted monthly variation

(%)

Corporations: seasonally adjusted monthly

variation (%)

100

120

140

160

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

Corporations

Individuals

6,1

2,7

1,6

1,0

0,7

0,6

-4,3

-4,8

Credit Card

Others

Personal Credit

Total

Acquisition of other…

Overdraft Facility

Acquisition of vehicles

Real Estate Finance

Total Default: individuals and corporations (%)

38

Corporations (%)Individuals (%)

Source: Brazilian Central Bank. Produced by: MB Associados.

Projection Projection

7,1

4,8

6,4

8,0

9,6

Dec-06 Dec-09 Dec-12

15 to 90 days

More than 90 days

3,9

0,0

1,6

3,2

4,8

Dec-06 Dec-09 Dec-12

15 to 90 days

More than 90 days

Default rate among individuals (more than 90 days overdue)

0

4

8

12

16

Jan-06 Jan-08 Jan-10 Jan-12

Overdraft Personal credit

Acquisition of vehicles Acquisition of other goods

Source: Bacen. Prepared by: MB Associados.

%

Inflation projections (%)

40

Montlhy 12 months

Feb-12 -0,06 0,07 0,45 5,8

Mar-12 0,25 0,25 0,42 5,5

Apr-12 0,32 0,33 0,53 5,2

2010 11,3 11,3

2011 5,1 5,0

2012 3,9 4,2

Sources: FIPE, FGV and IBGE. Estimates: MB Associados 09/03/2012.

IGP - M IGP - DIIPCA

6,5

5,5

5,9

Change in inflation as measured by the IPCA

41

Total IPCA and inflation

cores (monthly variation - %)


Total IPCA and inflation cores (12-

month cumulative growth - %)

0,52 0,510,55

0,490,52

0,50

0,56

0,45

Nov-11 Dec-11 Jan-12 Feb-12

Average of new cores IPCA

6,4

5,8

4,0

4,7

5,4

6,1

6,8

7,5

Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12

Core Inflation

Lag in gasoline and diesel prices on the domestic market

42

Comparison of the Domestic

and International prices of

Gasoline Based on Export Parity (US$/liter)

Comparison of the Domestic and

International Prices of Diesel Based

on Export Parity (US$/liter)

� On average the price of gasoline at

domestic refineries was 11% lower than

that practiced in the Gulf of Mexico

� On average the selling price of diesel at

Petrobras Refineries was 21% lower than

that of the fuel sold in the Gulf of

Mexico.

Source and Produced by: CBIE (Energy in the Spotlight, Feb/12).

CIDE: rates and federal tax collection

43

CIDE rates on the price of

gasoline and diesel (R$/liter)

CIDE: monthly change in tax

collection (*) (R$ million)

Source: Cbie, Federal Revenue Service. (*) At last month’s prices, deflated by IGP-DI. Produced by: MB Associados.

415,7

0

200

400

600

800

1.000

Jan-08 Jan-10 Jan-12

0,23

0,070,09

0,05

Gasoline Diesel

Former Current*

Estimated impact of increases in the price of gasoline and diesel

Average prices of Gasoline and

Diesel for the consumer (R$/liter)

Source: ANP, Cbie. Produced by and estimates by: MB Associados.

0,0

0,5

1,0

1,5

2,0

2,5

3,0

Diesel Gasoline

CIDE

R$ 2.0/liter

R$ 2.73/literGasoline Diesel

Consumer Price (R$/liter) 2,73 2,00

CIDE Tax (R$/liter) 0,09 0,05

% increase in prices 11% 21%

CIDE Tax as % of cons. Prices 3,3% 2,5%

% increase if CIDE tax is removed 7,7% 18,5%

Iten Weight in IPCA composition 4,11% 0,13%

Impact on Inflation (IPCA)

(in pp)0,32 0,02

Focus Bulletin: market’s expectations for IPCA in 2013

45

Expectations of the Top 5

Institutions (annual variation - %)

Market’s expectations (relative frequency - %)

Source: Brazilian Central Bank (Focus Bulletin, 03/05). Produced by: MB Associados.

5,0

4,5

5,0

5,5

6,0

09/11/11 09/12/11 09/01/12 09/02/12 09/03/12

2013

Government will continue to try to set a floor for the FX rate (R$/dollar)

46

1,3

1,6

1,9

2,2

2,5

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12Source: IBGE. Prepared by: MB Associados.

1,70

20/10/09 - IOF on fixed

and variable rate

operations from 0% to

2.0%

18/11/2009 - IOF on ADR

emission from 0% to 1.5%

04/10/10 - IOF on fixed rate

operations from 2.0% to

4.0%

18/10/10 – IOF on fixed

rate operation from 4.0%

to 6.0%

28/03/11 – IOF on credit

card operations from 2.38%

to 6.38%

06/04/11 – IOF on

international loans

(6.0%) – 720 days

29/03/11 – IOF on

international loans

(6.0%) -360 days

29/02/12 – IOF on

international loans

(6.0%) - 3 years

27/07/11 – IOF

on short positions

in derivatives

from 0% to 1%

12/03/12 –

IOF on

international

loans (6.0%)

- 5 years

CPMF and IOF – in cumulative 12-month terms in R$ millions

47

0,0

10.000,0

20.000,0

30.000,0

40.000,0

50.000,0

60.000,0

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

CPMF IOF

Source: STN. Production: MB Associados.

MB Associados

Av. Brigadeiro Faria Lima, 1,739 – 5th floor

São Paulo – SP – 01452-001

Telephone: (011) 3062 - 1085

Fax: (011) 3062 - 8482

www.mbassociados.com.br

ap cccc 09 (i)

Economy & Finance

growth of income

growth figures

total growth

central banks asset

euro zone

yearcredit growth financing

european central banks

mb associados