apresentação do presidente alexandre tombini, no seminário the brazil infrastructure opportunity...

7/29/2019 Apresentao do Presidente Alexandre Tombini, no seminrio The Brazil Infrastructure Opportunity 20130926 New York.pdf

1/29

Alexandre Tombini

Governor

September 2013

Brazil Economic Outl

New York


2/29

Main topics

Inflation Inflation is retreating Monetary policy limiting FX pass-t

Growth Gradual economic recovery Investment is recovering

Reforms will have positive effects

UMP Exit Brazil is resilient due to sound fun Central Bank has buffers and instr

mitigate adverse effects


3/29

Inflation

Supply shocks (commodities and fresh fo

affected inflation trajectory in 2H12 and 1H13

Ten consecutive years of inflation within the ta

BCBs actions mitigate ER pass-through

BCB started to act early in 2013 to bring inf

declining trend


4/29

0

3

6

9

12

15

Jan11

Mar11

May11

Jul11

Sep11

Nov11

Jan12

Mar12

May12

Jul12

Sep12

Nov12

Jan13

Mar13

YoY%

CPI Food and Beverages CPI ex-Food and Beve

1st supply shock

2nd supply

shock (freshfood)

Source: IBGE

Inflation adversely affected by supply


5/29

5

10

15

20

Jan06

Jul06

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

%

Policy rate Swap reference rate - 360-day term

7.0

7.4

7.8

8.2

8.6

9.0

Nov

Dec

Jan

%

Source: BCB/BM&F

Monetary policy actionsBCB acted in early 2013 to mitigate second order effects of suppl

tapering signaling, BCB mitigate the ER pass-through risk

Communication

Policy rate


6/29Source: IBGE / BCB (Focus)

Inflation is receding

jun 136.7

ago 136.1

2

3

4

5

6

7

8

Jan13

Feb13

Mar13

Apr13

May13

Jun13

Jul13

Aug13

Sep13

Oct13

YoY%

CPI Expected CPI (Focus)


7/29

0

2

4

6

8

10

12

14

16

18

Dec99

Dec00

Dec01

Dec02

Dec03

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

%1

2months

CPI Inflation Re ort Jun 13

Source: IBGE / BCB

Inflation within target bandsTen consecutive years of inflation in target zone in 20


8/29

Gradual economic recovery

Agriculture: record grain crop expected for

Employment, wages and credit

Economic growth drivers

Reforms to boost productivity and competi

Tax reforms to reduce costs

Infrastructure concessions to private secto

Rebalance: Consumption x Investment


9/29

Source: Bloomberg * qoq sa

-0.6-0.4

-0.3-0.2-0.2

0.00.0

0.20.20.30.30.3

0.50.5

0.60.8

0.81.0

1.51.6

-1 -0.5 0 0.5 1 1.5 2

ItalySpain

RussiaEuro Area

FranceGermany

Mexico

PolandSouth Africa

USColombia

UKAustralia

CanadaBrazilChile

South KoreaJapan

TurkeyChina

Real GDP QoQ Growth in 1Q13

-0.7-0.3-0.3

-0.10.30.40.4

0.50.50.60.60.0.0

-1 0

MexicoItaly

RussiaSpain

Euro AreaPoland

Canada

ChileFrance

AustraliaUSUK

GermanySouth Africa

JapanSouth Korea

BrazilChina

TurkeyColombia

Real GDP QoQ Growt

Growth dynamics in 2013


10/29

Source: IMF (WEO forecasts, April and July 2013)

Economic growth is expected to gath

* April.

-1.8-1.6

-0.6-0.2

0.30.9

1.71.72.02.0

2.52.52.82.93.0

3.15.6

7.8

-5 -2 1 4 7 10

ItalySpain

Euro AreaFrance

GermanyUKUS

CanadaJapan

South AfricaRussia

BrazilSouth Korea*

MexicoAustralia*

WorldIndia

China2013

0.00.70.80.91.21.31.5

2

0 2

SpainItaly

FranceEuro Area

JapanGermany

UKCanada

USSouth Africa

BrazilMexicoRussia

Australia*World

South Korea*India

China2014


11/29

Source: IBGE

-2.4-1.9

-1.4

1.5

4.7

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.04.0

5.0

1Q 12 2Q 12 3Q 12 4Q 12 1Q 13

Q

oQ

S.A

(%)

Gross Fixed Capital Formation

Stronger investment


12/29

55

75

95

115

Jan07

Jul07

Jan08

Jul08

Jan09

Jul09

Jan10

Jul10

Jan11

Jul11

Jan12

Jul12

Jan13

Jul13

Retail Sales

2007=100

5.4%

(YoY %)

5.8%(YoY %)

1

3

5

7

Jan12

Mar12

May12

Jul12

Sep12

Nov12

YoY%

Em lo ment Real Inc

5.5

468

1012

14

Jul02

Jul03

Jul04

Jul05

Jul06

Jul07

Jul08

Jul09

Jul10

Jul11

Jul12

Jul13

MoM%s

a

Source: BCB/IBGE

Support for domestic demand

Unemployment Rate Employment and Labo

Credit OutstaRetail Sales

010

20

30

40

Mar08

Sep08

Mar09

Sep09

Mar10

Sep10

Mar11

YoY%

Total Households (no


13/29

160.1 161.9

120125130135140

145150155160165170175

180185190

2007 2008 2009 2010 2011 2012

milliontons

production of grains

Source: IBGE

2013/2012

= 15.7%

Est

Record grain harvest expected in 20

R f t b t th


14/29

Reforms to boost growth

Tax reforms to reduce costs

Tax incentives for infrastructure and R&D investmen

Payroll tax cuts

Measures to increase competitiveness and investm

Building a skilled labor force (Science without

Pronatec Programs) Concessions program revamped

Highways, railroads, ports and airports

Oil & gas

B il d f UMP it


15/29

Sound external economic fundamentals

CB actions to mitigate economic and financial risk

volatility and FX markets disruption

Brasil prepared for UMP exit

Flexible exchange rate regime first line of defense

Robust international reserves (USD374 billion)

Sound financial system

B il N t E t l C dit


16/29

375.2

0

50100

150

200

250

300

350

400

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

US$billion

Source: BCB

International Reserves Net External

Brazil Net External Creditor

as of Sep 20th 2013

-110

-70-30

10

50

90

130

170

210

1983

1986

1989

1992

1995

1998

US$billion

E t l D bt f EME


17/29

External Debt of EMEs

Source: Datastream / IIF

21.4

21.4

27.9

29.6

29.8

31.4

34.9

44.7

48.8

20.9

21.4

28.7

25.6

30.2

29.5

32.7

43.9

48.3

15 25 35 45 55

India

Colombia

Indonesia

Brazil

Mexico

Peru

South Africa

Chile

Turkey

External Debt / GDP

2012 2013**IIF forecast.

9.4

13.6

13.6

1

9.4

13.3

13.5

1

5 10 15

Brazil

Peru

Colombia

South Africa

Chile

Mexico

India

Indonesia

Turkey

Short Term External D

2012 *IIF forecast.

* Brazil data includes intercompany debt transactions and domestic debt inhands of foreign investors

L id t h ldi f G d


18/29

Source: IMF (Fiscal Monitor April 2013)

Low nonresident holdings of Gov. de

6.7

8.9

14.3

17.6

19.4

23.5

29.1

29.6

31.9

32.0

32.1

33.235.1

61.3

63.5

0 10 20 30 40 50 60 70

India

Japan

South Korea

BrazilRussian Federation

Canada

Spain

Turkey

UK

South Africa

US

MexicoItaly

Germany

France

Australia2012 (% of Total Debt)

B il i L di R i i t f FDI


19/29

Source: UNCTAD

Brazil is Leading Recipient of FDI

197.9

114.7

85.7

82.7

50.6

48.6

48.5

46.9

43.3

42.8

40.8

35.2

32.5

30.6

29.2

0 50 100 150 200

USA

China

Belgium

Hong Kong

UK

Singapore

Brazil

Germany

Russian

Ireland

Spain

Australia

Switzerland

France

Saudi Arabia

2010226.9

124.0

103.3

96.1

66.7

65.8

64.0

52.9

51.1

41.4

40.9

40.4

34.3

31.6

29.5

0 50 100 150 200

USA

China

Belgium

Hong Kong

Brazil

Australia

Singapore

Russian

UK

Canada

France

Germany

Italy

India

Spain

2011

0

USA

China

Hong Kong

Brazil

UK

France

Singapore

Australia

Canada

Russian

Ireland

India

Chile

Luxembourg

Belgium

CAD comfortably financed by FDI


20/29

Source: UNCTAD

19.0

26.3

27.9

82.5

111.0

120.3

138.6

171.5

319.3

0 100 200 300 400

South Africa

Turkey

India

Indonesia

Mexico

Brazil

Colombia

Peru

Chile

FDI / CAD (in %, 2012)

-6.6

-6.5

-5.1

-4.0

-3

-3

-

-

-8 -6 -

Turkey

South Africa

India

Chile

Peru

Colombia

Indonesia

Brazil

Mexico

CAD (12M A

* June 2013

CAD comfortably financed by FDI

Capital flows


21/29

0

5

10

15

20

25

30

35

40

Jan12

Apr12

Jul12

Oct12

Jan13

Apr13

accum.12

months(US$billion)

E uities Fixed Income

Source: BCB

Capital flows

Flows increased even after tapering talk (May 22 2

Timely Central Bank action to mitiga


22/29

FX interest rate swaps and FX repo program (la

Aug 22) Goal: provide hedge to economic agents, liquidity to domes

and reduce excessive market volatility

Measures (weekly auctions during 2013):

FX interest rate swap auctions: USD2 billion

FX Repo: USD1 billion

The program succeeded in taming ER vol

providing FX hedge and liquidity

USD100 billion (equivalent) until the end

considering issues before the program announce

Timely Central Bank action to mitiga

Efforts to reduce risks are successfu


23/29

Source: BCB

Efforts to reduce risks are successfu

Brazil has a sound financial system


24/29

Source: IMF /FSI (latest available data)

Brazil has a sound financial system

11

12

13

13

1414

14

14

14

15

15

1616

17

17

18

10 12 14 16 18 20

Spain

Australia

Italy

Russia

IndiaJapan

Korea

France

United States

Canada

South Africa

United Kingdom

Mexico

Brazil

Turkey

Germany

Regulatory Capital to Risk-WeightedAssets

-74

-28

-22

-21-16

-15

-15

-12

-10

-6

-3

-3

9

10

-100 -50 0

Italy

Spain

South Africa

JapanUnited Kingdom

Australia

United States

India

Russian

Canada

Turkey

Korea, Republic of

Mexico

Brazil

( Provisions NPL) / Capital

Ind

South Afri

United Kingdo

Austra

Mexi

Cana

Jap

Turk

United Stat

Ita

Russi

Kore

Germa

Bra

Liquid Ass

L

Banks have a low share of external f


25/29

Source: BCB

Banks have a low share of external fOrigin of Bank Funding

95.788.8

82.190

4.311.2

17.99

0%

20%

40%

60%

80%

100%

Public-owned Private-owned Foreign-controlled To

Domestic External


26/29

FinalRemarks

Final remarks


27/29

Final remarks

Inflation is receding and Central B

committed to ensure it will remain on a d

path

Brazil is prepared to face the tran

normalize global monetary environment

Growth is gathering momentum and co

program will support investment and confid


28/29

Alexandre TombiniGovernor

September 2013

Brazil Economic OutlNew York

Glossary


29/29

BCB Central Bank of Brazil

BM&F Brazilian Exchange Company

CAD Current Account Deficit

EME Emerging countries

FDI Foreign Direct Investment

FGV Getulio Vargas Foundation

Focus Brazilian Market Survey sponsored by BCB

IBGE Brazilian Institute of Geography and StatisticsIMF International Monetary Fund

UMP Unconventional Monetary Policy

UNCTAD United Nations Conference on Trade and Development

Glossary

apresentação do presidente alexandre tombini, no seminário the brazil infrastructure opportunity...

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