the bndes and the perspectives for the brazilian economy luciano coutinho president of the brazilian...
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The BNDES and the perspectives for the Brazilian Economy
Luciano CoutinhoPresident of the Brazilian Development Bank (BNDES)
March 3rd, 2010
2
Brazil aced the crisis test
The Brazilian economy can grow much faster than the average in
developed countries;
The domestic market will make the expansion in demand
feasible: basic household consumption, housing and durable
goods;
Investments will be driven by four main sectors: oil & gas, electric
power, logistics and residential construction;
Opportunities for intensive strategies in innovation and social and
environmental sustainability;
Main challenges: increase aggregate investment/GDP rate, and
boost competitive progress in the manufacturing industry.
The Brazilian economy can grow much faster than the average in
developed countries;
The domestic market will make the expansion in demand
feasible: basic household consumption, housing and durable
goods;
Investments will be driven by four main sectors: oil & gas, electric
power, logistics and residential construction;
Opportunities for intensive strategies in innovation and social and
environmental sustainability;
Main challenges: increase aggregate investment/GDP rate, and
boost competitive progress in the manufacturing industry.
3
Global Growth
2010 2011 2010 2011USA 2.7 2.4 3.0 2.6Euro Zone 1.0 1.6 1.7 1.6Germany 1.5 1.9 - -France 1.4 1.7 - -UK 1.3 2.7 - -Japan 1.7 2.2 2.1 1.2Mexico 4.0 4.7 4.4 3.5Brazil 4.7 3.7 5.8 4.0China 10.0 9.7 10.0 10.0India 7.7 7.8 8.5 9.0Russia 3.6 3.4 3.7 2.8
GDP Growth Rate (%)IIF ForecastsIMF Forecasts
Source: IMF and IIF.
4
Countries’ share of Brazilian exports
Source: Ministry of Development, Industry and Trade. Elaborated by: MF/SPE
2002 2008
Developing Countries
38%
Developing Countries
52%Developed Countries
62%
Developed Countries
48%
Developing countries have increased their share of Brazilian exports. These countries were less affected by the crisis and they are expected to show higher growth levels in the years to come.
Developing countries have increased their share of Brazilian exports. These countries were less affected by the crisis and they are expected to show higher growth levels in the years to come.
5
GDP may grow 5% p.a. in the 2010-2014 period
Source: IBGE.
GPD: Annual Real Variation (%)GPD: Annual Real Variation (%)
* 2009 and Avg 2010-14: BNDES' Forecasts.
Sources: IBGE and BNDES.
*
2.8 2.5
5.7
3.24.0
6.15.1
0.1
5.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Average1984-93
Average1994-03
2004 2005 2006 2007 2008 2009 Average2010-14
6Source: IBGE, Secex e Funcex.
Brazilian industrial downturn was mainly due to weak external demand ...
104.4
96.8 92.4
80.682.5
69.6
100
65707580859095
100105110
Exports of Manufactured goods
Industrial Production
Retail Sales
Industrial Production, Retail Sales and Exports(index: September 2008=100)
7
Growth Rate Quarter by Quarter (%)
Household consumption resumed growth
0.1
-1.2
0.5
1.11.4
0.9 0.91.4
0.5
1.4 1.41.7
1.0 1.2 1.0
1.6
2.1
0.90.5
2.4
1.4 1.3
-1.2
0.4
2.42.0
3.5
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
1Q 2
003
2Q 2
003
3Q 2
003
4Q 2
003
1Q 2
004
2Q 2
004
3Q 2
004
4Q 2
004
1Q 2
005
2Q 2
005
3Q 2
005
4Q 2
005
1Q 2
006
2Q 2
006
3Q 2
006
4Q 2
006
1Q 2
007
2Q 2
007
3Q 2
007
4Q 2
007
1Q 2
008
2Q 2
008
3Q 2
008
4Q 2
008
1Q 2
009
2Q 2
009
3Q 2
009
Source: IBGE
8Source: IBGE
Unemployment rate down from 10.2% in Jan/05 to 7.2% in Jan/10
Unemployment rate fell...
Average unemployment rate (%) - IBGE
10.22005
10.9
2006 9.32007
8.0 2008
2009
6.8
2010
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
9.3
8.2
7.2
9Source: IBGE
…and wages increased
Up to December 09
REAL WAGES - Average for the last 12 monthsR$ Billion
29.56
29.36
28.66
26.68
25.13
23.6121.93
21
22
23
24
25
26
27
28
29
30
Aug-0
4
Dec-0
4
Apr-0
5
Aug-0
5
Dec-0
5
Apr-0
6
Aug-0
6
Dec-0
6
Apr-0
7
Aug-0
7
Dec-0
7
Apr-0
8
Aug-0
8
Dec-0
8
Apr-0
9
Aug-0
9
Dec-0
9
Source: IBGE
10
Investment has been recovering since the second quarter of 2009
Gross fixed investmentPercentage Change From Preceding Quarter (%)
3.5
-0.1 0.4
5.4 5.8 6.5
10.9
-0.9
4.33.2
7.1
-9.9
0.71.8
3.42.2
-1.0
2.0
-11.0
3.04.1
1.0
3.7
2Q 2
004
3Q 2
004
4Q 2
004
1Q 2
005
2Q 2
005
3Q 2
005
4Q 2
005
1Q 2
006
2Q 2
006
3Q 2
006
4Q 2
006
1Q 2
007
2Q 2
007
3Q 2
007
4Q 2
007
1Q 2
008
2Q 2
008
3Q 2
008
4Q 2
008
1Q 2
009
2Q 2
009
3Q 2
009
4Q 2
009*
Source: IBGE and BNDES/APE
*forecasting
11
Credit/GDP ratio grew even after the crisis worsened in Sept/08
Evolution of Credit/GPD ratio (%)
22.0
24.0 24.5
28.1
30.2
34.2
41.3
45.0 44.6
20
25
30
35
40
45
50
2002 2003 2004 2005 2006 2007 2008 2009 2010*
Source: Brazilian Central Bank
*Up to January
12
State-owned banks sustained credit after the crisis
The BNDES alone was responsible for 37% of the increase in credit from Sept/08 to Jan/10
Source: Bacen.
Contribution to Credit Growth (Sept/08-Jan/10)
Contribution to Credit Growth (Sept/08-Jan/10)
Credit Growth(Index September 2008 = 100)
Credit Growth(Index September 2008 = 100)
Private Banks 27%
BNDES37%
Other State-owned Banks 36%
100
109.0113.9
118.3121.2
100
106.9
132.9
150.1
144.6
141.2
138.8
109.5
105.6103.2
103.3
102.4
102.9102.6
90
100
110
120
130
140
150
Sep-0
8
Nov-08
Jan-0
9
Mar
-09
May
-09
Jul-0
9
Sep-0
9
Nov-09
Jan-1
0
Public Banks
Private Banks
13
Impact of anti-cyclical policies on debt
54.1
72.9 France
56.9
76.2 Germany
101.3
117.0 Italy
80.4
115.0 Japan
38.3
75.1 UK
42.3
66.8 US
43.438.8
43.942.0 Brazil
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
2003 2004 2005 2006 2007 2008 2009 2010
ForecastPublic Sector Net Debt (%GDP)
Source: IMF and Brazilian Central Bank.
14
Investment has strong growth path
Source: BNDES. Elaborated by: APE/BNDES
Forecast of Investment Ratio 2009-2012 (% of GDP)
16.4
17.6
19.0
21.2
20.2
18.6
16.9
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
2006 2007 2008 2009 2010 2011 2012
Forecast
15
BNDES was responsible for 37% of total credit increase since Sept/08
BNDES was responsible for 37% of total credit increase since Sept/08
Source: BNDES. *considering the average exchange rate for each year
BNDES Approvals and Disbursements1 (US$ billion)BNDES Approvals and Disbursements1 (US$ billion)
10.913.1 13.6 12.9
19.322.3 23.5
34.1 33.1
50.6 50.5
66.3 68.8
85.2
71.5
88.2
0
10
20
30
40
50
60
70
80
90
2003 2004 2005 2006 2007 2008 2009 2010*
Disbursements Approvals
*last 12 months up to January 2010
16
Source: Ministry of Finance
Permission for banks to issue a new bond, entitled the Financial Letter/Note, to raise long-time funding.
Exemption of PIS/Cofins, IPI and II on computer parts and components acquired for the "One Computer for Every Child Program".
New measures to stimulate the economy in 2010FISCAL INCENTIVES
US$ 1.8 billionFINANCING LINES US$ 77 billionFederal government credit lines for the BNDES
FINANCIAL INCENTIVES
Extension of Tax Exemption on Industrialized Products (IPI) for Capital Goods
Federal government extension of subsidies over the interest rate for financing granted by the BNDES (Capital Goods, exports and innovation)
Temporary suspension of IPI, PIS/Cofins and Import Taxes (II) related to investments in refining and the petrochemical industry
Extension to 2014 of exemption of PIS/Cofins taxes on retail computers
Loans of US$ 8 billion, using federal government funds, for the Merchant Navy Fund
The government continues to stimulate the economy
US$/R$ = 1.80
17
My House, My Life
74,554 88,452 93,844 98,259141,110 143,649 130,289
186,765
275,528
2002 2003 2004 2005 2006 2007 2008 2009
New credits My House, My Life Program
New credits (homes contracted)462,293
18
BNDES ProCopa Programs
Arenas
Up to US$ 2.7 billion to build and remodel stadiums and
urbanization investments in surrounding areas.
Tourism
Up to US$ 556 million to build, remodel, expand and
modernize hotels.
Arenas
Up to US$ 2.7 billion to build and remodel stadiums and
urbanization investments in surrounding areas.
Tourism
Up to US$ 556 million to build, remodel, expand and
modernize hotels.
US$/R$ = 1.80
19
Challenges for infrastructure
Belo Monte Hydroelectric Plant and, afterwards, Tapajós;
Railways, roads and ports;
2014 World Cup;
PAC - Urban Transport;
2016 World Olympics;
High-speed Train (TAV);
Environmentally sustainable projects and concern for
surrounding areas.
Belo Monte Hydroelectric Plant and, afterwards, Tapajós;
Railways, roads and ports;
2014 World Cup;
PAC - Urban Transport;
2016 World Olympics;
High-speed Train (TAV);
Environmentally sustainable projects and concern for
surrounding areas.
20
Investment outlook: positive prospectsInvestment outlook: positive prospects
Sectors Growth 2005-8 2010-13 (%)
Infrastructure 111 152 6.5
Industry 191 271 7.2
Total 302 423 7.0
US$ billion
US$/R$ = 1.80
Source: BNDES Forecast
21
Investment in Industry: Domestic-led sectors have already recovered from the crisis
Investment in Industry: Domestic-led sectors have already recovered from the crisis
Sectors US$ billion Growth
2005-2008 2010-2013 % year
Oil and Gas 112 171 8.8
Mining 29 25 (3.1)
Steel 15 20 5.7
Petrochemical 5 17 28.9
Vehicles 12 17 7.3
Electronics 8 12 6.7
Pulp & Paper 10 10 0.5
Industry 191 271 7.3
Source: BNDES
22
Sectors US$ billion Growth
2005-2008 2010-2013 % year
Electric Power 38 51 6.4
Telecom 37 37 0.2
Sanitation 12 22 11.7
Railroads 9 16 13.2
Roads 23 33 7.8
Ports 5 14 22.9Infra 111 152 6.5
Investments in Infrastructure were not affected by the crisis
Investments in Infrastructure were not affected by the crisis
Source: BNDES
23
Brazil’s Long Term Challenges
Resume and qualify long-term planning (energy, logistics, environment, IT infrastructure, ...);
Promote and stimulate domestic savings in order to provide long-term funds for investment (banks and capital market)
Develop capacity for innovation and competitiveness in the manufacturing industry, and promote global presence of Brazilian companies (vs. significant challenge due to exchange rate appreciation)
Increase opportunities for social mobility (job expansion, development/improvement in education) and reduction of the inequality in income distribution;
Promote innovation and development of renewable energy sources.
24