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BRAZILIAN ECONOMICOVERVIEW
DEREXDepartment of Trade and Foreign Affairs
Represents 131 sector business associations which stands for about 130.000 state and national firms
42 regional offices throughout the state which represents about 10.000 associated firms
Think tank specialized in industrial issues
INDUSTRY SYSTEM
BRAZILIAN ECONOMY OVERVIEW
Roberto Simonsen Institute
INDUSTRY SYSTEM
171 technical schools and almost 800.000 students registrations
172 basic schools and more than 500.000 children. youth. adults and elderly people
BRAZILIAN ECONOMY OVERVIEW
Provides industrial employee’s families with social services. mainly education. culture. sports and health
Promotes professional education through technical schools providing qualified workforce to the industry
Aviônicos – Mobile School
Federation of Industries of the State of São Paulo
Regional Action
Human Capital
Competitiveness and Technology
Economy
Entrepreneurship
Infrastructure and energy
Foreign Affairs
Legal Division
Environment
Small and Medium Companies
Union and Labor Issues
Social responsibility
DEREX
• FOREIGN RELATIONS. TRADE AND INVESTMENT PROMOTION;
• INTERNATIONAL NEGOTIATION AND TRADE ECONOMIC RESEARCH;
• TRADE REMEDIES;
• TRADE FACILITATION;
• CERTIFICATE OF ORIGIN;
BRAZILIAN ECONOMY OVERVIEW
SCOPE
Brazilian Economic Growth drivers in the first decade of the 2000s
Macroeconomic Balance: fiscal balance. stable inflation and trade surplus;
Social Inclusion: credit and wage growth;
Foreign Trade: agricultural and mineral commodities well performed;
Infrastructure: renewable resources as base for the energy matrix;
The Economist cover on September the28th, 2013.
BRAZILIAN ECONOMY OVERVIEW
9.0
2.9
8.77.9
14.1
9.2
13.512.8
15.8
13.2
15.514.9
Brazil China Latin America and theCaribbean
World
GDP per capita, PPP (current international $)(1.000 US$/year)
2000 2010 2014Source: World Bank
BRAZILIAN ECONOMY OVERVIEW
Brazil | GDP per capita
Brazil| Agribusiness: position in global ranking
Source: USDA (March 2015); DEAGRO/FIESP
BRAZILIAN ECONOMY OVERVIEW
1º 1º 1º1º1º 1º 2º 4º
74% 46% 34%41%29% 21% 16% 8%
1º 1º 3º2º1º 2º 3º 4º
55% 27% 15%31%36% 17% 8% 3%
Exp
ort
sP
rod
uct
ion
Orange Juice Sugar ChickenCoffee Beef Soy Complex Corn Pork
1,5 3,6
53%
261%
Área (millhões de ha):
Produção (millhões de t):
3858
58
2099
0/9
1
91/
92
92/
93
93/
94
94
/95
95/
96
96
/97
97/
98
98
/99
99
/00
00
/01
01/
02
02/
03
03/
04
04
/05
05/
06
06
/07
07/
08
08
/09
09
/10
10/1
1
11/1
2
12/1
3
13/1
4
14/1
5*
Produtividade (t/ha): + 136%
8
Source: Conab (August 2015) and DEAGRO-Fiesp.(*) Note: estimate of Brazilian production for 2014/15
Brazil | Production of grains
BRAZILIAN ECONOMY OVERVIEW
Area (million hectares): + 53%
Production (million tonnes): + 261%
Productivity (tons/ha): + 136%1.5 3.6
Brazil | Trade Flow: main partners
BRAZILIAN ECONOMY OVERVIEW
Source: Ministry of Development. Industry and Trade(1) Main logistics hub of Europe
Country Part.
United States 23.7%
Argentina 11.9%
Germany 6.3%
Japan 4.9%
Italy 3.9%
France 3.3%
Netherlands 3.2%
United Kingdom 2.5%
Mexico 2.2%
Belgium 2.1%
Subtotal (top 10) 64.1%
Total 100.0%
2000Country Part.
China 17.2%
United States 13.7%
Argentina 6.3%
Germany 4.5%
The Netherlands 3.6%
Japan 2.8%
South Korea 2.7%
India 2.5%
Nigeria 2.3%
Italy 2.3%
Subtotal (top 10) 57.7%
Total 100.0%
2014
66.7 65.3 64.0 62.5
35.5
2011 2012 2013 2014 2015¹
Annual net inward FDI (US$ billion)
Main Investors 2015(jan-aug)
17.1%
16.0%
12.6%
5.2%
4.5%
NLD¹
USA
ESP
JAP
FRA
BRAZILIAN ECONOMY OVERVIEW
Source: Central Bank of Brazil
(1) Europe's main logistics hub(2) January to August 2015
Brazil | Foreign Investment
Brazil | Energy Matrix
Source: Brazil’s Mines and Energy Ministry(2014)
BRAZILIAN ECONOMY OVERVIEW
41%59%
Renovável Não-renovável
Nuclear Energy
Renováveis Não-renováveis
4%
8%
13%
16%
1%
6%
13%
39%
Other
Firewood
Hydraulic
Sugarcane
Mineral coal
Natural gas
Oil
Non-renewable Energy Renewable Energy
The Economist cover on September the28th, 2013.
In spite of the improvements in the past years, the obstacles to the productive sector persist.
Tax Burdencosts + bureaucracy
Labor Relationscosts + legislation
LaborSkilled Labor
Pension
Infrastructure:logistics + energy
Political System
Cost of capital
CUSTO BRASIL
BRAZILIAN ECONOMY OVERVIEW
5.7
3.2
4.0
6.0
5.0
-0.2
7.6
3.9
1.8
2.7
0.1
-3.0
-1.0
2.3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5¹
201
6¹
201
7¹
Annual GDP growth rate (%YoY)
Brazil | GDP Growth
Source: Central Bank of Brazil(1) Forecast: International Monetary Fund (IMF)
BRAZILIAN ECONOMY OVERVIEW
18.0 17.4 18.0
20.0
21.8
19.0
21.8 21.820.3
21.020.0
18.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹
Investment rate (Investment as % of GDP)
Source: International Monetary Fund(1) Forecast: IMF
BRAZILIAN ECONOMY OVERVIEW
Brazil | Investment (GFCF)
Source: Central Bank of Brazil; National Confederation of Industry (CNI)
BRAZILIAN ECONOMY OVERVIEW
Brazil | Cost of capital and Industry
14.25
74.5
75.5
76.5
77.5
78.5
79.5
80.5
81.5
82.5
83.5
6
7
8
9
10
11
12
13
14
15
% of total installed% change YoY
NUCI SELIC
Target interest rate (SELIC) and Industrial capacity utilization (NUCI)
19.8
%
19.9
%
20.0
%
20
.4%
21
.7%
22
.2%
23
.1%
23
.9%
23
.9%
25
.8%
26
.0%
26
.1%
26
.5%
27.1
%
29.0
%
30.4
%
30.4
%
30.4
%
31
.9%
32
.2%
Port
ugal
Au
stra
lia
Can
ada
Fin
lan
d
Ger
man
y
Net
her
lan
ds
Gre
ece
Un
ited
Sta
tes
Hu
nga
ry
Spai
n
Au
stri
a
Esto
nia
Cze
ch…
Slov
akia
Ital
y
Mex
ico
Fran
ce
Swed
en
Bra
zil
Bel
giu
m
Labor Benefits and taxes (% of total manufacturing labor costs)
Fonte: Bureau of Labor Statistics; Conference Board(2013)
BRAZILIAN ECONOMY OVERVIEW
Brazil | Labor
96.77
154.29
70
95
120
145
170
Industrial Production Retail Sales
Industrial production and Retail sales (2007=100)
Source: Brazilian Institute of Geography and Statistics (IBGE)
BRAZILIAN ECONOMY OVERVIEW
Brazil | Production and Sales
16.2 21.0 23.1 29.8
41.4 43.2
66.2
90.4 84.2 79.7 78.0
52.9
5.2 8.4 5.1 -9.2
-39.8 -36.5
-71.2
-91.8 -94.0 -104.3 -109.4
-60.7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹
Trade balance by product categories(US$ billion)
Source: Ministry of Development, Industry and Trade (MDIC)(1) January to September 2015
BRAZILIAN ECONOMY OVERVIEW
Basic
Semi-Manufactured
Manufactured
Brazil | Trade Balance
BRAZILIAN ECONOMY OVERVIEW
Source: MDIC
Brazil | Exports agenda
Product Part.(%) Product Part.(%)
Airplanes 6.2 Iron ores and concentrates 11.5
Iron ores and concentrates 5.5 Soybeans,whether or not broken 10.3
Soybeans,whether or not broken 4.0 Petroleum oils 7.3
Passenger car 3.2 Raw sugar 3.3
Transmitter or receiver devices 3.2 Soybean bran 3.1
Soybean bran 3.0 Frozen chicken meat 3.1
Chemical wood pulp 2.9 Coffee beans 2.7
Coffee beans 2.8 Frozen beef 2.6
Footwear and its parts 2.8 Chemical wood pulp 2.4
Semi-finished products of iron or steel 2.5 Corn 1.7
Subtotal (top 10) 36.1 Subtotal (top 10) 47.9
Total 100.0% Total 100.0%
2000 2014
374.3
21%
10%
15%
20%
25%
30%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹
0
100
200
300
400
500
600
Trade flow Openness of the economy
Economic openness of Brazil (US$ billion and % of GDP)
Source: MDIC(1) Forecast: FIESP and IMFNote: Openness of the economy is the ratio of country's total trade to the country's gross domestic product.
BRAZILIAN ECONOMY OVERVIEW
Brazil | Openness of the economy
33.844.9 46.5 40.0
25.0 25.3 20.129.8
19.42.6
-4.0
11.5
-50
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹
Trade Balance Exports Imports
Brazilian trade balance (US$ billion)
Brazil | Trade Balance
Source: MDIC(1) Forecast: Fiesp – September 2015
BRAZILIAN ECONOMY OVERVIEW
0.75
1.76 1.581.25
0.11
-1.71-1.49
-2.2 -2.12-2.41
-3.62
-4.19 -4.05
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015¹
Current account evolution (as % of GDP)
Source: Central Bank of Brazil(1) Forecast: IMFNota: Current account consists of regular transactions with the rest of the world
BRAZILIAN ECONOMY OVERVIEW
Brazil | Current Account
180.3193.8
238.5
288.6
352.0
373.1358.8
368.2 361.4
2007 2008 2009 2010 2011 2012 2013 2014 2015¹
International reserves (US$ billion)
Source: Central Bank of Brazil(1) January to September 2015
BRAZILIAN ECONOMY OVERVIEW
Brazil | International Reserves
CHALLENGES FOR THE INTERNATIONAL INDUSTRY AGENDA
Proposals for the External Integration ofIndustry 2014
Regional Integration: MERCOSUR’s development and bilateral agreements with other Latin American countries (Peru, Colombia);
Extra-regional Integration: to reach agreements with countries with high technological development (United Stated, European Union e Japan);
Multilateralism;
Economic Partnerships: to develop policies of trade and investments with other countries;
Institutional Structure: to strengthen CAMEX’s role
BRAZILIAN ECONOMY OVERVIEW
BRAZILIAN ECONOMY OVERVIEW
1Market Access
2 Trade Promotion
3 Trade Facilitation
4 Trade Finance and Guarantees
5 Tax environment improvement
Source: MDIC
BRAZILIAN TRADE OPPORTUNITIES
BRAZILIAN ECONOMY OVERVIEW
Consumer Markets widening: removal of trade barriers and deeper connection to the world network of trade agreements
Build, consolidate, sustain Market share for exports
Simplification of Aduana laws and bureaucracy
Improvement of trade finance and guaranteesmecanisms, according to the exporters needs
Tax environment improvement to the exporteractivity (e.g.: REINTEGRA)
1
2
3
4
5
National Export Plan| Scope
Source: MDIC
52% 30% 8% 5% 5%
Road Railway Cabotage Waterway Pipeline
Brazil | Transport logistics
Source: Brazil’s Transport Ministry (2011)
BRAZILIAN ECONOMY OVERVIEW
Sao Paulo | Airline hub in South America
BRAZILIAN ECONOMY OVERVIEW
Brazil
Uruguay
Argentina
Chile
Paraguay
Bolivia
Peru
Ecuador
Colombia
Venezuela GuyanaSuriname
FrenchGuiana
Buenos AiresMontevideo
Panama
Sao Paulo
Brasilia
Santiago
La Paz
Lima
Quito
Bogota
Caracas
Asuncion
2h
4h
5h
6h
3h
BRAZILIAN ECONOMY OVERVIEW
Source: Brazilian Development Bank (BNDES)
INVESTMENTS INDUSTRY
Brazil |Investment Outlook
2010-2013 2015-2018
Oil and Gas 358 509 42.1%
Automotive 58 59 0.4%
Food 58 49 -15.8%
Mineral Extraction 44 40 -8.0%
Electronics 22 28 25.9%
Sugar and Ethanol 41 25 -40.5%
Chemical Industry 22 22 2.6%
Pulp and Paper 20 21 2.5%
Health Industry 12 13 11.9%
Steel 25 12 -50.3%
Aerospace Industry 4 12 187%
Others 112 121 8.0%
Total 775 909 17.3%
SECTORSR$ billion - 2014 Percentage
change
BRAZILIAN ECONOMY OVERVIEW
Source: BNDES
INVESTMENT IN INFRASTRUCTURE
Brazil |Investment Outlook
2010-2013 2015-2018
Telecommunications 102 141 37.8%
Social Infrastructure 53 87 64.6%
Roads 62 80 29.1%
Railroads 23 45 98.9%
Ports 15 36 141%
Airports 11 16 49.5%
Total 457 598 30.8%
SECTORSR$ billion - 2014 Percentage
change
Thank you!+55 11 3549-4635 / 4532
derex@fiesp.com.br
General DirectorThomaz Zanotto
Deputy DirectorsAntonio Fernando G. BessaEduardo de Paula RibeiroGeraldo HaenelJosé Augusto CorrêaMário MarconiniNewton de MelloVladimir Guilhamat
BRAZILIAN ECONOMY OVERVIEW