Good report about Brazil in 2010.

1. Brazil:
Sustainable
Growth
Min. Guido Mantega
April 2010

2. 2
Brazil: one of the fastest growing economies in 2010
GDP growth forecast – selected countries – in % of GDP
* The Economist forecast Source: The Economist
** Government forecast Produced by: Ministry of Finance

3. 3
New social and economic paradigms
• Emphasis on a more robust growth
• Employment generation
• Social inclusion and income distribution
• Investment enhancement
• Government encourages and promotes
growth
• Efficient stimulus programs

4. 4
Robust employment generation and more formal jobs
Net employment generation – in thousands of workers
* Government forecast of 1.8 million for 2010, of which 657,259 Source: CAGED /MTE
comprised within the accumulated year period up to Mar-2010 Produced by: Ministry of Finance

5. 2010: the smallest unemployment rate in a time series
Unemployment rate – in % of economically active population
Source: PME/IBGE
Produced by: Ministry of Finance

6. New middle class and Brazilian unification
Social class distribution - in % of population
Source: MDS, MTE and CPS/FGV
Produced by: Ministry of Finance

7. Social classes diversify consumption
% change in the purchased value (food, beverages, hygiene and cleaning)
* Average monthly household income is specified below
* Class D/E: from R$ 0 to R$ 1,115
Class C: from R$ 1,115 to R$ 4,807 Source: Kantar World Panel
Class A/B: from R$ 4,807 and on Produced by: Ministry of Finance

8. 8
Highest employment rate in the world
Net employment generation forecast for Q2 2010*
Gap within companies that expect job raising (43%) as opposed to the ones which expect a
reduction (5%) in Q2 2010 (% between Q1:2010 and Q4:2009)
* Expected employment generation from Manpower Consulting research Source: Manpower Consulting
8for the Q2 2010 based on interviews with 850 companies in Brazil Produced by: Ministry of Finance

9. 9
Purchasing power of minimum wage
Today’s minimum wage buys more products – in numbers of staple food baskets
Source: DIEESE
Produced by: Ministry of Finance

10. 10
Dinamycs of Brazilian domestic demand
Retail sales – selected countries - % change from 2008 to 2009
Fontes: IDV
Produced by: Ministry of Finance

11. 11
Retail Sales - PMC
% change from preceding every 12-month period
* Including automobiles, motorcycles, parts and pieces, and Source: IBGE
construction materials Produced by: Ministry of Finance

12. 12
Government action is essential
• Infrastructure stimulus: PAC
• PAC is a strategic investment program with
management and infrastructure planned
actions
• Industrial sector policy
• Income distribution
• Acting and efficient State-owned companies
(BNDES, BB, CAIXA, BNB, Petrobras)

13. 13
Investment enhancement
% change from preceding year
* Ministry of Finance Forecasts Source: IBGE
13 Produced by: Ministry of Finance

14. 14
Federal Government and State-Owned Companies
Investment
Cash basis - % of GDP
* Ministry of Finance Forecasts Source: Ministry of Finance
14 Produced by: Ministry of Finance

15. 15
Industry investment volume
Industry resource distribution - realized and planned by sector of activity
Source: BNDES
15 Produced by: Ministry of Finance

16. Decade of infrastructure to come
Investments in R$ billions
Source: Exame Infrastructure Yearbook 2009-2010
16 Produced by: Ministry of Finance

17. 17
Construction growth in Brazil
Average number of contracts by presidential terms
Source: Abecip and CAIXA
Produced by: Ministry of Finance

18. 18
2010: Sustainable and quality growth
• Growth is sustainable because it doesn’t
create macroeconomic imbalances
• Inflation under control – efficient inflation
targeting regime
• Robust fiscal rules – primary surplus target of
3.3 % of GDP in 2010 and continuous
reduction in net public debt
• Low external vulnerability

19. 19
Evolution of inflation index, target and expectations%
% change from every 12-month period
* Market Forecasts FOCUS Report from April 9th, 2010 Fontes: IBGE and Brazilian Central Bank
Produced by: Ministry of Finance

20. Decomposition of Monthly Inflation (% change)
0.9
Remaining itens Fuel (ethanol and gasolines)
0.8
0.7 Tranport (tickets and fares) Food (in house)
0.6
0.5
0.4
0.3
0.2
0.1
0.0
-0.1
-0.2
20
Source: IBGE.
20 Elaborated by: MF/SPE

21. 21
Sustainable PAC: reduction of public debt
Fiscal results – primary surplus and nominal deficit/surplus - in % of GDP
**
* Ministry of Finance Forecasts Source: Brazilian Central Bank and The Economist
Produced by: Ministry of Finance

22. -
10,0
15,0
20,0
25,0
5,0
(5,0)
jan/03
abr/03
jul/03
out/03
jan/04
abr/04
jul/04
out/04
GDP
jan/05
abr/05
jul/05
out/05
jan/06
Primary expenditure
Net primary revenue
abr/06
jul/06
out/06
jan/07
abr/07
jul/07
out/07
jan/08
abr/08
jul/08
22
out/08
jan/09
abr/09
jul/09
Nominal Growth rate (% YOY)
out/09
jan/10
abr/10

23. 23
Sustainable nominal deficit: reduction of public debt
Nominal deficit - in % of GDP
* Ministry of Finance Forecasts in February, 2010 Source: The Economist
** G-20 nominal deficit average refers to Apr 15th, 2010 ed. Produced by: Ministry of Finance

24. 24
Sustainable PAC: reduction in public debt
Public Sector Net Public Debt - in % of GDP
* Ministry of Finance Forecasts in February, 2010 Source: Brazilian Central Bank
Produced by: Ministry of Finance

25. 0
5
10
15
20
25
30
35
40
38
Brazil
37
South Korea
35
Philippines
Indonesia
34 34
Mexico
Turkey 33
32
Peru
31
South Africa
Transparency
30
Chile
29
Hungary
24
Poland
Paquistan
21 21
Thailand
20
Lebanon
18
Bulgaria
Colombia
16 16
Romania
12
Malaysia
Costa Rica
Croatia
Egypt
11 11 11 11
Ukraine
Uruguay
10 10
Venezuela
9
Vietnam
6
Belize
6
Tunisia
4
Ecuador
4
Russia
3
China
IIF Ranking on Investors Relation and Data
3
Morocco
2
Dominican…
25

26. 26
Deficit in Current Account does not bind growth, nor increase
external vulnerability
Current Account – in US$ billions and % do PIB
* Government Forecasts Source: Brazilian Central Bank
26 Produced by: Ministry of Finance

27. 27
Lower external vulnerability
International reserves and external debt - in % of GDP and index
Source: Brazilian Central Bank
Produced by: Ministry of Finance

28. 28
From supporting to leading country
• Brazil is respected and highly regarded.
• Change: from debtor to creditor and new
protagonist position.
• The myth that “Brazil is a second-class
country” has fallen apart.
• Brazil could became one of the most
dynamic countries in this decade.