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Brazil: Sustainable Growth Min. Guido Mantega April 2010

Brazil: Sustainable Growth Min. Guido Mantega April 2010. Brazil: one of the fastest growing economies in 2010 GDP growth forecast – selected countries – in % of GDP. Source: The Economist Produced by: Ministry of Finance. * The Economist forecast ** Government forecast.

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Brazil: Sustainable Growth Min. Guido Mantega April 2010

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

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

  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. 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 comprised within the accumulated year period up to Mar-2010 Source: CAGED /MTE 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 Class A/B: from R$ 4,807 and on Source: Kantar World Panel Produced by: Ministry of Finance

  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) Source: Manpower Consulting Produced by: Ministry of Finance * Expected employment generation from Manpower Consulting research for the Q2 2010 based on interviews with 850 companies in Brazil 8

  9. Purchasing power of minimum wage Today’s minimum wage buys more products – in numbers of staple food baskets Source: DIEESE Producedby: MinistryofFinance

  10. DinamycsofBraziliandomesticdemand Retailsales – selected countries - % changefrom 2008 to 2009 Fontes: IDV Producedby: MinistryofFinance

  11. Retail Sales - PMC % changefromprecedingevery 12-monthperiod Source: IBGE Producedby: MinistryofFinance * Includingautomobiles, motorcycles, partsandpieces, andconstructionmaterials

  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. Investment enhancement % changefromprecedingyear Source: IBGEProducedby: MinistryofFinance * MinistryofFinanceForecasts 13

  14. Federal GovernmentandState-OwnedCompaniesInvestment Cashbasis - % of GDP Source: MinistryofFinance Producedby: MinistryofFinance * MinistryofFinanceForecasts 14

  15. Industryinvestment volume Industryresourcedistribution - realizedandplannedby sector ofactivity Source: BNDESProducedby: MinistryofFinance 15

  16. Decadeofinfrastructure to come Investments in R$ billions Source: Exame InfrastructureYearbook 2009-2010 Producedby: MinistryofFinance 16

  17. Constructiongrowth in Brazil Averagenumberofcontractsbypresidentialterms Source: Abecipand CAIXA Producedby: MinistryofFinance

  18. 2010: Sustainableandqualitygrowth • 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. Evolutionofinflationindex, targetandexpectations% % changefromevery 12-monthperiod Fontes: IBGE and Brazilian Central Bank Produced by: Ministry of Finance * MarketForecasts FOCUS ReportfromApril 9th, 2010

  20. Decomposition of Monthly Inflation (% change) 20 20 Source: IBGE. Elaborated by: MF/SPE

  21. Sustainable PAC: reductionofpublicdebt Fiscal results – primarysurplusand nominal deficit/surplus - in % of GDP ** Source: Brazilian Central BankandTheEconomist Producedby: MinistryofFinance * MinistryofFinanceForecasts

  22. Sustainable nominal deficit: reductionofpublicdebt Nominal deficit - in % of GDP • * MinistryofFinanceForecasts in February, 2010 • ** G-20 nominal deficitaveragerefers to Apr 15th, 2010 ed. Source: TheEconomist Producedby: MinistryofFinance

  23. Sustainable PAC: reductionin publicdebt Public Sector Net PublicDebt - in % of GDP * MinistryofFinanceForecasts in February, 2010 Source: Brazilian Central Bank Producedby: MinistryofFinance

  24. IIF Ranking onInvestorsRelationand Data Transparency

  25. Deficit in CurrentAccount does notbindgrowth, norincreaseexternalvulnerability CurrentAccount – in US$ billionsand % do PIB Source: Brazilian Central Bank Producedby: MinistryofFinance * GovernmentForecasts 26

  26. Lowerexternalvulnerability International reserves andexternaldebt - in % of GDP andindex Source: Brazilian Central Bank Producedby: MinistryofFinance

  27. Fromsupporting 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.

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