Bresil Le Pays Du Present-2

8/3/2019 Bresil Le Pays Du Present-2

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FRANOIS DOSSA - July 2009

Brsil, le pays du prsent


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Table of contents

About Brasil

3

02


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By 2019 emerging countries should account for more

than half of the worlds GDP

Share and forecast of emerging countries and developedcountries in the global GDP - 1989 2019

4

03

1989

1990

1991

1992

1989

1989

1993

1994

1996

1995

2000

1999

1998

1997

2003

2002

2001

2007

2006

2005

2004

2011

2010

2009

2008

2015

2014

2013

2012

2019

2018

2017

2016

30,0%

35,0%

40,0%

45,0%

50,0%

55,0%

60,0%

65,0%

70,0%

Assumptions based on GDP growth

Developed growth: 2.52%

Emerging growth: 6.92%

Global Growth 2013-2019: 4,7%

36,77%

36,17%

36,44%

37,13%

37,30%39,52%

42,54%

46,26%48,20

53,35%

56,80%

63,23%

63,83%

63,56% 63,12% 62,13%

57,46%

53,74%

43,94%45,84%

49,89%

Emerging

Developed


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The weight of BRIC countries in the global GDP

Share of US and BRIC countries in the global GDP (in %) 1995-2009

5

20.06%

21.88%22.32%

22.99%22.98%

23.61%23.23%

20.49%

19.69%

15.28%

16.54%15.07%

0.1

0.12

0.14

0.16

0.18

0.2

0.22

0.24

0.26

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

EUA BRIC

04


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Nominal GDP > 800 billionof US$

Population > 100 millionArea > 4 million km

Brasil, playing in the big league

05

Indonesia

Nigeria

Bangladesh

Pakistan

India

Mexico

France

Japan

Germany

Italy

UnitedKingdomSpain

South Korea

Canada

Australia

Russia

USA

Brazil

China


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Brasils Main Economic Features: a great market

Total population

Area

GDP per capita

Population growth

8,514,876 km2

World's 5th

largest

194,227,984World's 5th largest

1,4 % in 2008

USD 6,937

Literacy rate 89.35%

Source: IBGE

Fertility rate 2009: 1.8 children / women in the ageof procreationFertility rate in 1960: 6 children / women in the ageof procreation

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Brasil: feeding the world?

Sugar

20.3

5.5

3.5

M tons

Coffee

24.6

18.5

10.6

M 60 kg bags

Iron Ore

342

268

85

M tons

Soybean

33.7

26.2

7.4

M tons

Orange Juice

1.2

0.1

0.05

M tons

Poultry

3.5

3.3

0.7

M tons

Beef

1.801

1.407

625

K tons

Tobacco *2007

0.7

K tons

Ethanol

5.2

Billion Liters

June, 2009

08

Exports


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Brasils Main Economics Features:

also a Leader in the Industry

Power100,449 MW installed capacity

Itaipu: Worlds largest hydroelectric plant in installed capacity(12% of the global hydric resources).

Brasil has a non-neglectable nuclear potential, and is consideredthe 6th worldwide producer of uranium (300.000T).

AviationEmbraer:Among the worlds 3 largest aircraft manufacturers

Pulp and PaperWorlds 4th largest producer and among thebiggest exporters

ShoesWorlds 3rd largest exporter

Telecom43.5 million installed fixed lines154 million mobile phonesHandsets: Worlds 2nd producer

Auto Industry2009 Production (Jan-April) 917 thousandvehicles5th worldwide largest manufacturer

OilPetrobrs ranks among top 3 worldwide marketcapitalization.

Tupi reserves = 30 billion barrels.

MiningVale:Worlds 2nd iron ore largest producerMarket value: US$ 101 billions

Brasil is the 8th steelmaker and one of the biggestmining producers with large corporations likeGerdau, Usiminas, CSN...

IndustryBrasil has 13 of the 100 future global leaders in their respectivefields (WEG, VALE, COTEMINAS, GERDAU, NATURA, BRFOODS,etc.)Global positioning in growing sectors in which the global supply islower than the demand in the long-term

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90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

125110 121 109 111

151

203

297

349Historical average

204

9Source: MDIC 6

Metal commodities price index 1990-2009 (2008 YTD)

June 2009

394

09

S

ource:BradescoandFMI

10

104 10199116

09080706050403020100999897969594939291

9498

90

Historical average

8581

85 8689 98

122102

8371 72 73

8390 100 89103

153

209

155

Agricultural Commodities Price Index Grains 1990-2009 (2008 YTD)

Commodity prices still above historical average helping

the trade surplus


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Positive FDI evolution

Source: BCB 10Source: MDIC 6

A new level in 2008 showing the strong interest of MNCs

10.000

30.000

50.000

70.000

ChinaBrasil

45,000

54,000

34,585

18,82215,06618,14610,144

2x

Rssia ndia

20086,500 15,000

2008 2008 200820072006200520042003

**estimate 2009

Source: MCM/Veja Magazine

2009

25,000**

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Source: IBGE

Unemployent under control

12

12,5

8,5

10,5

6,5

Sep/06Mar/05 Sep/05 Mar/06 Mar/09Sep/08Mar/08Sep/07Mar/07

Mar/200510,8% Mar/2008

10,4%

Dec/2008 6,8%

Mar/20099,0%Mar/2008

8,6%

Mar/2007

10,1%

May/2009

8,7%


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29

Inflation: not an issue anymoreBrazilian government elected inflation as focus number one in its economical policy.

Central Bank used interest rates to maintain inflation within the target.

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14

What are the main advantages in reducing interest rate

(1/2)Annual monthly average of Brazilian interest rate

Dec/09Jan/07Mar/05May/03Jul/01Sep/99Nov/97Jan/96

10

5

0

33,8%

9%

13,1%

19%

26,3%

18,6%19,4%

45,9%

15

20

25

30

35

40

45

50

Source: IBGE


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15

1989 1994 1999 2004 2009 2011

29,132,7

26,3 23,6

45,6

90

Increase of the credit total offer Evolution of infrastruture investment in Brasil

2001 2003 2005 2007 2009 2010 2012

3317

37

52

7982 89

2008 2009

162

134

% on GDP Billion R$

Billion R$

Reduction on public debt cost

What are the main advantages in reducing interest rate

(2/2)Increase of individuals at Bovespa

2005

2007

2009

2013

155.183

456.557

519,057

1 million


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New discoveries should increase Brazilian reserves upto 90 Bn boe and put Brazil in the top 7 producingcountries

Petrobras is the main player in this sector

3rd largest energy company worldwide (by Market Cap)

Global leadership in deepwater drilling

Brasil: A new energy giant?Oil & Gas

Brazilian self sufficiency in oil production was

achieved in 2006 (1.8 MM bbl/day)

Petrobras is investing in ethanol. In 2007 ethanolconsumption overcame gasoline consumption in Brazil

1114Source: MDIC 6Source: Bloomberg; of 06/2009

Petrobrs Capex: 142 Billion USD in 4 years.

16

MARKET CAP(USD BN)COMPANY

2009

RANKING

1

2

3

4

5

6

7

8

9

10

Petrochina

Exxon Mobil

Petrobras

Royal Dutch

Total S.A

BP

Grazprom

Chevron

China Petroleum $118,50

$139,10

$146,78

$162,70

$163,66

$174,95

$181,37

$352,76

$361,99

BHP Biliton$157,31


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The Demographic Transition: an historical opportunity

Wealthier consumers seeking more comfort.

A rising household consumption.

Emergence of a middle-class.

19802020 2050

Men Men MenWomen Women Women

60 years old

60 years old 60 years old

15 years old15 years old 15 years old

50 million new producers and consumers.

121 million people 209 million people 250 million people

The evolution of total population gives Brasil 30 years of guaranteed growth.

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Explosion of the medium class: 97,2 million people in

2008Income increase boosting consumption

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

12

%

15

%

4

3%

54%

45%

31%

2002 2008

Class A/B Class C Class D/E

Increase of themedium classReductionof poverty

Source: Veja 12Source: MDIC 6Source: FGV Ago 2008March 2008

Source: Veja Magazine

Source:CPS/FGVbasedoninformationfrom

PME/IB

GE

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Credit expansion further leveraging consumptionTotal credit and credit/GDP growth

0

2006 2007 2008

Credit Volume BRL MM

0

5

10

15

20

25

2005 2006 2007 2008

Credit/GDP Ratio (%)

30

35

40

28.1 30

.834.7

37.7

200.000

400.000

600.000

800.000

1.000.000

498,3

660.8

10

523.8

96

13Source: MDIC 6

1.200.000

660,8

871,9

2005

403,7

40.2

41.3 4

4.0

2009

February 2009

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Brazil

Chile

frica do Sul

Holanda

EUA

0.0

50 %

100 %

150 %

200 %

250 %

40%

63%

141%

166%

249%

Source:VejaMagazine

Low Risk: Brazils percentage of loans is low compared to other economies.

March, 2009

Brasils Percentage of Loans: nothing to worry about

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0.0

100

200

300

400

500

600

Brasil

Russia

Before Crisis Before CrisisAfter Crisis After Crisis

2

05

20

9

581

404

Brasils Foreign Reserves: no impact of the crisis

* Billion dollars

Source:BloombergandBCB

Brasil slightly increased foreign reserves since the beginning of the crisis inSeptember, 2008.

June, 200921


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WellsFargo

HSBCBank ofAmerica

UBS

GoldmanSachs

BNPParibas Bradesco

JPMorgan

CreditSuisse

SocieteGenerale RBS

Citigroup

MorganStanley

Barclays

DeutscheBankk

155117 86

714244

49

36

70

16

29

Itau &Unibanco

74

215

36

118216

100

108 101 7550 116 76

49

120

255

165

54

Market Cap 2Q 2007

Market Cap 06/01/2009 USD Bi

29

BB +Votorantim

136

Santander

91

116

Brazilian Banks among the Global Players

19

80

3637

91

23

39

29


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Brasil the best of emergents in 9 of 15 criterias (1/2)

2 3 51

Brasil

Rssia

ndia

China

Mxico

3,22

2,86

2,89

3,08

2,86

1 2 3 54

Brasil

Rssia

ndia

China

Mxico

3,29

5. The best telecominfrastructure

4

2,88

3,14

3,01

2,67

Brasil

Rssia

ndia

China

Mxico

1 2 3 4 5

3,43

2,77

2,62

2,94

3,23

1. Highest rate of return overthe last 5 years

2. The best in businessopportunities in the next 5 years

Research conducted by Exame Magazine with 69 of the world's largest companies, listed in the ranking of the Fortune 500.

24

3. Executives well prepared4. Best quality of staff withintermediate educational level

Brasil

Rssia

ndia

China

Mxico

3,38

2,86

2,96

2,83

2,99

1 2 3 4 5

Brasil

Rssia

ndia

China

Mxico

1 2 3 4 5

3,28

2,97

2,78

2,90

3,07


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Brasil the best of emergents in 9 of 15 criterias (2/2)

8. The most reliable politicalsystem

9. Most social and politicalstability

7. Best level of economicstability

6. Best natural resources

Rssia

ndia

China

Mxico

Brasil 3,57

1

Brasil

Brasil Brasil

Rssia

Rssia

Rssiandia

ndia

ndia

China

China

China

MxicoMxico

Mxico

3,01

2,65

2,9

2,87

2 3 4 5 1

1 1

2

2

3

3 32

4

4 4

5

5 5

3,23

2,86

2,99

2,83

3,1

3,42

2,99

2,81

2,52

3,26

3,36

2,81

2,78

2,88

3,16

25


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Brasil: Risk today is much more on microeconomy

An important informal economy is remaining:

Tax evasion, forgery, smuggling.

26

And Brasil has to invest in education.

Firms penalized by deficits in infrastructure.Ports, airports, roads, public transportation.

... And by a blurred sectorial regulatory framework.Weakness of the sectorial regulation agencies.

A high tax pressure (more than 37% of the GDP).

Many heavy and rigid regulations.Labour law, firm creation procedures.


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Growing capital flows

Financing cost proportionally lower

New target for foreign investments

Brasil: the future is today!

Three important consequences:

40

30

20

10

0

-10

-20

-30

-40

-50

1999 2000 2001 2002 2003 2004 2005 2006 2007

___USD Dbn

Inflows Outflows Net flows

Foreign Direct Investment Flows

Source: D & B Country report

27

50

2008


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Macroeconomy: 15 years of continuity make the

difference and inspire confidence!

No specific worry about 2010 election.

Growing independence of the economic and political sectors.

Emergence of a financial orthodoxy : inflation targeting , reducing external vulnerability,recovery of public finances.

Broad consensus on an economic policy sustaining growth.

A country in which market share is still affordable.

And...

No specific social or racial conflict in the country.

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Bresil Le Pays Du Present-2