recovery of the brazilian economy€¦ · the economy reflects the adjusted policies booming...
TRANSCRIPT
DYOGO HENRIQUE DE OLIVEIRA
Minister of Planning, Development and Management
RECOVERY OF THE BRAZILIAN ECONOMY
A GLOBAL POWERHOUSEThe largest economy in Latin America The 9th largest GDP in the world (USD 1,8 trillion in 2016)
5TH LARGEST COUNTRY BY AREA (8 515 767 sq km)
5TH LARGEST POPULATION (208 MILLION)
GLOBAL DESTINATION FOR INVESTMENT6th FDI host economy, averaging over USD 85 billion per year from 2010 to 2016
NET EXTERNAL CREDITORBrazil has accumulated substantial international reserves (USD 381 billion in 2017)Reserves are more than enough to cover its total external debt
BRAZIL WITHIN THE WORLD ECONOMY
GDP GROWTH RATE OF 2.6% ON AVERAGE SINCE 2000.
HIGH HUMAN DEVELOPMENT INDEX (0.754)
ACTIVE WORKING AGE POPULATION OF AROUND 70% (WORLD AVERAGE: 65%)
HIGH LEVEL OF FORMAL EDUCATIONAdults with advanced education: almost 20% of the total; finishing secondary education: 50%
SHARP DECLINE IN POVERTYShare of the population living in poverty (under USD 1.90/day): from over 30% (in the 1980s) to 4.3% in 2015.
A RESILIENT MARKET
A COMPETITIVE INDUSTRIAL SECTORLatin America’s largest aerospace, automotive, oil and gas, mining, capital goods,
medical equipment and chemical industries.Host to many leading multinational manufacturers and world-class service industries.
A KEY PLAYER IN THE INTERNATIONAL MARKET Among the top producers and exporters of commoditiesSecond-highest exporter of food (FAO 2015) One of the top producers and exporters of ethanol biofuelMajor producer and exporter of agricultural and mining products14% of global iron ore reserves and 18% of global iron ore production
VAST NATURAL RESOURCESOne of the largest petroleum reservesOver 43% of Brazil’s energy matrix comprised of renewable sourcesCultivated land area comprises only 7.6% of the country’s total area (NASA 2017)Hydroelectric power provides over 60% of Brazil’s electricity needs Biggest fresh water reserves in the world
A DIVERSIFIED ECONOMY WITH PLENTY OF NATURAL RESOURCES
SOLID FOUNDATIONS AND FINANCIAL STABILITY
The Brazilian macroeconomic framework has been the same for nearly 2 decades
Inflation targetFloating exchange rateFiscal responsibility
Macroeconomic and financial stability
Credit market with high potential for expansionFinancial and social inclusionHigh level of international reserves
THE ECONOMY REFLECTS THE ADJUSTED POLICIES
BOOMING CAPITAL MARKET
87,652 ptsSTOCK EXCHANGE RECORD HIGHCLOSING INDEX OF FEB. 26, 2018
LOW INFLATION2.95%
LOWER ANNUAL INFLATION RATE SINCE 1998CONSUMER PRICE INDEX (IPCA) FOR 2017
STRONG BALANCE OF PAYMENTS
US$ 64.4 billionTRADE BALANCE RECORD HIGH IN 2017
US$ 380 billionSTABLE RESERVES FOR THE PAST 6 YEARS
LOW INTEREST RATE6.75%
LOWEST INTEREST RATE IN HISTORYCOPOM BASE RATE IN FEB. 2018
ECONOMIC RECOVERY
FOREIGN CONFIDENCE ON BRAZILIAN FUNDAMENTALS HAS IMPROVED
156
0
100
200
300
400
500
600
700
Au
g-0
6
Feb
-07
Au
g-0
7
Feb
-08
Au
g-0
8
Feb
-09
Au
g-0
9
Feb
-10
Au
g-1
0
Feb
-11
Au
g-1
1
Feb
-12
Au
g-1
2
Feb
-13
Au
g-1
3
Feb
-14
Au
g-1
4
Feb
-15
Au
g-1
5
Feb
-16
Au
g-1
6
Feb
-17
Au
g-1
7
Feb
-18
CDS 5 yrs (bps) Investment Grade Period - S&P and Fitch
171 (average Apr/2008 to Sep/2015)
Source: Bloomberg
THE END OF THE ECONOMIC RECESSION
Source: IBGE and BCB/FOCUS of Feb. 23, 2018
Market Projections
-1,3%
-2,2%
-3,5%
-4,4% -4,6%-4,2%
-3,5%
-2,2%
-1,2%-0,2%
1,0%1,6%
2,2%2,6%
2,8%3,1%
II -
20
15
III -
20
15
IV -
20
15
I - 2
01
6
II -
20
16
III -
20
16
IV -
20
16
I - 2
01
7
II -
20
17
III -
20
17
IV -
20
17
I - 2
01
8
II -
20
18
III -
20
18
IV -
20
18
I - 2
01
9
Gross Domestic Product(% change in 4Q ver the previous period)
SHARP RECOVERY OF THE ECONOMIC ACTIVITY
Source: IBGE
2,5%
2,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%D
ec-1
0
Ap
r-1
1
Au
g-1
1
Dec
-11
Ap
r-1
2
Au
g-1
2
Dec
-12
Ap
r-1
3
Au
g-1
3
Dec
-13
Ap
r-1
4
Au
g-1
4
Dec
-14
Ap
r-1
5
Au
g-1
5
Dec
-15
Ap
r-1
6
Au
g-1
6
Dec
-16
Ap
r-1
7
Au
g-1
7
Dec
-17
RETAIL SALES
INDUSTRIAL PRODUCTION
(12-mo. accumulated)
AUTO PRODUCTION REGISTERS AN IMPRESSIVE RECOVERY
Source: ANFAVEA
24,7%
-30,0%
-20,0%
-10,0%
0,0%
10,0%
20,0%
30,0%
40,0%Ja
n-1
1
Ap
r-1
1
Jul-
11
Oct
-11
Jan
-12
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
Ap
r-1
6
Jul-
16
Oct
-16
Jan
-17
Ap
r-1
7
Jul-
17
Oct
-17
Jan
-18
Total Auto Production(12-mo. accumulated)
13,6
12,2
0
2
4
6
8
10
12
14
16
Unemployment rate
THE LABOR MARKET RECOVERS
11
Source: IBGE
(in 1,000 people) Mar. 2017 Jan. 2018 Chg.
Employed Population 88.947 91.702 2.755
Labor Force 103.123 104.391 1.268
5,90
4,31
5,91 6,50
5,84 5,91
6,41
10,67
6,29
2,95 3,73 4,25 4,00
-
2,00
4,00
6,00
8,00
10,00
12,00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
IPCA (acum. 12m) Meta de Inflação Limite para efeito de cumprimento da meta
Source: IBGE and BCB2017-2020: BCB/Focus of of Feb. 16, 2018
BRAZIL ADOPTED A SUCCESSFUL INFLATION TARGET REGIME
REAL INTEREST RATES ARE FALLING
Source: Brazilian Central Bank - BCB* Swap DI-Pre of 360 days over expected IPCA inflation in 12 months
9,1%
1,4%
8,6%
2,6%
0,00%
1,00%
2,00%
3,00%
4,00%
5,00%
6,00%
7,00%
8,00%
9,00%
10,00%
Au
g-0
8
No
v-0
8
Feb
-09
May
-09
Au
g-0
9
No
v-0
9
Feb
-10
May
-10
Au
g-1
0
No
v-1
0
Feb
-11
May
-11
Au
g-1
1
No
v-1
1
Feb
-12
May
-12
Au
g-1
2
No
v-1
2
Feb
-13
May
-13
Au
g-1
3
No
v-1
3
Feb
-14
May
-14
Au
g-1
4
No
v-1
4
Feb
-15
May
-15
Au
g-1
5
No
v-1
5
Feb
-16
May
-16
Au
g-1
6
No
v-1
6
Feb
-17
May
-17
Au
g-1
7
No
v-1
7
Feb
-18
Real interest rate ex-ante* (%)
61,0
75,8
60
62
64
66
68
70
72
74
76
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
2,0%1,8%
0,4%
-0,6%
-2,2%-2,8%
0,3%
-1,3%
-4,8%
-3,4%
-8,5%
-3,2%
-0,4%
-2,0%
-3,6%
-0,7%-1,0%
IV -2017
III -2017
II -2017
I -2017
IV -2016
III -2016
II -2016
I -2016
IV -2015
III -2015
II -2015
I -2015
IV -2014
III -2014
II -2014
I -2014
IV -2013
Gross Fixed Capital FormationQoQ %, s.a.
14
Souce: IBGE Source: IBGE
INVESTIMENT IS GAINING TRACK
Production of Capital GoodsIndex 2012=100 s.a., 3-mo moving average
35000
45000
55000
65000
75000
85000
95000
Bo
vesp
a In
dex
THE STOCK EXCHANGE IS AT RECORD HIGHS
Source: Bloomberg
February 28, 2018 January 26, 2016 Change %
Ibovespa 85,354 37,497 128%
Petrobras (PETR3) 23.12 6.21 272%
Vale do Rio Doce (VALE3) 47.32 9.02 424%
Banco do Brasil (BBAS3) 42.60 13.00 228%
Eletrobras (ELET3) 24.89 5.20 379%
Closing prices as of Feb. 28, 2018
CREDIT CONDITIONS ARE IMPROVING
16
3,4%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
Credit Approval(12-mo. accumulated)
Source: BCB
18,86
3,25
2,0
2,5
3,0
3,5
4,0
4,5
15
16
17
18
19
20
21
22
23
24
25
Credit Spread (p.p.) Delinquency rate (%)
INCREASE IN THE DISPOSABLE INCOME DUE TO INTEREST RATE REDUCTION
17
(US$ bi)
01Q18 02Q18 03Q18 04Q18
Total: US$ 44.7 billion** (2.2% PIB)
*(Exchange rate of 3.2439 BRL per USD, Feb. 2018 monthly average)
11.1
13.312.3
8.0
TRADE BALANCE AT RECORD HIGH
69.416
890
620
0
200
400
600
800
1.000
1.200
-10.000
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
Sep
-11
De
c-1
1
Ap
r-1
2
Jul-
12
No
v-1
2
Mar
-13
Jul-
13
Oct
-13
Feb
-14
Jun
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
De
c-1
5
Ap
r-1
6
Au
g-1
6
No
v-1
6
Mar
-17
Jul-
17
Oct
-17
Feb
-18
Saldo da Balança Comercial Exportações Importações
Source: SECEX/MDIC.
Trade BalanceAccumulated in 1 yearUS$ mm. FOB
Exports and ImportsDaily average accumulated in 1 year
US$ mm. FOB
EXTERNAL FINANCIAL NEEDS COVERED BY FOREIGN INVESTMENTS
-0,4%-0,5%-1,3%
-3,3%-4,2%
-3,0%-3,0%-2,9%-3,4%
-1,6%
2,8%3,1%3,6%3,4%2,9%2,2%
3,3%3,3%2,8%2,2%
2018201720162015201420132012201120102009
% o
f G
DP
Current Account Result Direct Investment in the Country
Source: BCB
STABLE INTERNATIONAL RESERVES FOR THE PAST 6 YEARS
383,7
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
400,0ja
n-0
9
mar
-09
mai
-09
jul-
09
set-
09
no
v-0
9
jan
-10
mar
-10
mai
-10
jul-
10
set-
10
no
v-1
0
jan
-11
mar
-11
mai
-11
jul-
11
set-
11
no
v-1
1
jan
-12
mar
-12
mai
-12
jul-
12
set-
12
no
v-1
2
jan
-13
mar
-13
mai
-13
jul-
13
set-
13
no
v-1
3
jan
-14
mar
-14
mai
-14
jul-
14
set-
14
no
v-1
4
jan
-15
mar
-15
mai
-15
jul-
15
set-
15
no
v-1
5
jan
-16
mar
-16
mai
-16
jul-
16
set-
16
no
v-1
6
jan
-17
mar
-17
mai
-17
jul-
17
set-
17
no
v-1
7
jan
-18
PPI - INVESTMENTS, CONCESSIONS AND PRIVATIZATIONS
US$ 8.6
billion*in signature bonuses
* R$ 28 billion and ** R$ 142 billion(Exchange rate of 3.2439 BRL per USD, Feb. 2018 monthly average)
Oil and Gas4th Marginal Fields Round May 11th, 201714th Exploratory Blocks Bidding Round Sept. 27th, 20172nd and 3rd Pre-Salt Production Sharing Bidding Rounds Oct. 27th, 2017
AirportsFlorianópolis, Fortaleza, Porto Alegre e Salvador July 27th, 2017
Electric PowerPrivatization of CELG-D Feb. 14th, 2017Hydroelectric Plant–Pery/SC July 07th, 2017Concession of 31 Transmission LotsConcession of 11 Transmission Lots
Aug. 11th , 2017Dec. 15th, 2017
Concession of Hydroelectric Plants: São Simão, Jaguara, Miranda e Volta Grande Sept. 29th, 2017
Port TerminalsTerminal of Salvador-Tecon Nov. 16th, 2016Terminal of Paranaguá-Fospar Nov. 16th, 2016Terminals STM 04 e 05 – Santarém March 23th, 2017Terminal of Santa Catarina–Tesc July 27th, 2017Wheat Terminal – RJ Aug. 22th, 2017Chemical Terminal of Itaqui/MA - Tequimar Aug. 22th, 2017Terminal of Vila do Conde/PA – Convicon Nov. 16th, 2017Terminals Nitport and Nitshore – RJ Nov. 27th, 2017
70Auctioned/
Renewed
145Projects in PPI Portfolion
US$ 43.8 billion*
In expected investments
ONGOING PROJECTS
22
75PPI Projects
US$ 41.7 billion*
in expected investmentsPort Terminals
22
Highways Railways
8 8Oil and gas
Electric PowerMining
31 Pre-salt sharing
1 Exploration and Production
1 Marginal accumulation
8UHE - 1 Extension
6 Distributors
4Concession to exploitation
of Mining areas
4 Biddings 5 Renewals
Lottery
1Concession of the
right to exploit
3 Biddings4 Studies
17Airports
13 Concessions
4 Shareholding selling
COMAER
1Public-Private Partnership
(PPP)
Currency House
1Privatization
Supply
2CEASAMINAS
CASEMGPrivatization
1 Privatization
*R$ 135.4 billion(Exchange rate of 3.2439 BRL per USD, Feb. 2018 monthly average)
PRIORITY AGENDA
Tax simplification: Social Contribution Reform
Central Bank autonomy
Legal framework for tenders and public procurements
New public finance law
Regulation on civil servants’ salaries
Privatization of Eletrobras
Strengthening of Regulatory Agencies
27
PRIORITY AGENDA
Central Bank's voluntary deposits
Reducing the payroll tax break
Business improvement and recovery program of state-owned companies
Positive Registry
Electronic system to centralize the register of trade receivables
Real estate purchase contract termination
Update of the General Telecommunications Law
Termination of the Sovereign Fund
28
High-level event for CEOs
2 full days of Panels with Ministers and CEOs
macroeconomic scenario
investment opportunities
regulatory framework
More information and pre-register: www.brasilinvestmentforum.com
BRASIL INVESTMENT FORUM 2018
May 29-30, in São Paulo, Brazil
Unique opportunity for direct meetings with high-level Brazilian authorities
DYOGO HENRIQUE DE OLIVEIRA
Minister of Planning, Development and Management
THANK YOU!