investimentos@ipdes.com.br

www.ipdes.com.br

BRAZIL

PERSPECTIVES & OPPORTUNITIES

Key facts

January 2018

Index

2

1. World perspectives pages 3-15

2. China in Latam & Brazil pages 16-28

3. Brazil pages 29-50

4. Opportunities pages 51-83

5. IPDES pages 84-87

3

1. World perspectives

4Source: IMF

GDP ranking in 2017*GDP at market exchange rates

– current US$

Economy %

1. China 18,2%

2. USA 15,2%

3. India 7,4%

4. Japan 4,2%

5. Germany 3,2%

6. Russia 3,1%

7. Indonesia 2,5%

8. Brazil 2,5%

9. UK 2,2%

10. France 2,2%

11. Mexico 1,9%

12. Italy 1,8%

13. Korea 1,6%

14. Saudi Arabia 1,4%

15. Canada 1,4%

16. Spain 1,4%

17. Iran 1,3%

18. Australia 1,0%

19. Thailand 1,0%

20. Egypt 1,0%

GDP PPP

in international US$

% Share of world GDP

PPP

G

Economy US$ bi

1. USA 19.36

2. China 11.94

3. Japan 4.88

4. Germany 3.65

5. UK 2.57

6. France 2.57

7. India 2.44

8. Brazil 2.08

9. Italy 1.92

10. Canada 1.64

11. Korea 1.53

10. Russia 1.47

12. Australia 1.39

14. Spain 1.31

15. Mexico 1.14

16. Indonesia 1.01

17. Netherlands 824

18. Turkey 841

20. Switzerland 680

19. Saudi Arabia 678

Economy US$ bi

1. China 23.12

2. USA 19.36

3. India 9.45

4. Japan 5.41

5. Germany 4.15

6. Russia 4.0

7. Indonesia 3.24

8. Brazil 3.22

9. UK 2.88

10. France 2.83

11. Mexico 2.41

12. Italy 2.31

13. Turkey 2.13

14. Korea 2.03

15. Saudi Arabia 1.79

16. Spain 1.77

17. Canada 1.76

18. Iran 1.63

19. Australia 1.24

20. Thailand 1.2

1. World perspectives

5Source: IMF. *GDP PPP based on WEO Report April 2015

Real GDP growth ranking 2017: who grew the most?

Economy %

1. Panama 5,3%

2. Dominican Rep 4,8%

3. Nicaragua 4,5%

4. Bolivia 4,2%

5. Honduras 4,0%

6. Paraguay 3,9%

7. Costa Rica 3,8%

8. Uruguay 3,5%

9. Guyana 3,5%

10. Guatemala 3,2%

11. Peru 2,7%

12. Belize 2,5%

13. Argentina 2,5%

14. Mexico 2,1%

15. Colombia 1,7%

16. Chile 1,4%

17 Brazil 0,7%

18 Ecuador 0,2%

19. Suriname -1,2%

20. Venezuela -12%

Latam

Economy %1. Libya 55,1%

2. Macao SAR 13,4%

3. Ethiopia 8,5%

4. Côte d’Ivoire 7,6%

5. Nepal 7,5%

6. Myanmar 7,2%

7. Bangladesh 7,1%

8. Djibouti 7,0%

9. Cambodia 6,9%

10. Lao P.D.R 6,9%

11. China 6,8%

12. Senegal 6,8%

13. India 6,7%

14. Guinea 6,7%

15. Philippines 6,6%

16. Turkmenistan 6,5%

17. Tanzania 6,5%

18. Burkina Faso 6,4%

19. Vietnam 6,3%

20. Rwanda 6,2%

1. World perspectives

World ranking Asia Europe

Economy %

1. Nepal 7,5%

2. Myanmar 7,2%

3. Bangladesh 7,1%

4. Cambodia 6,9%

5. Lao P.D.R. 6,9%

6. China 6,8%

7. India 6,7%

8. Philippines 6,6%

9. Vietnam 6,3%

10. Bhutan 5,9%

11. Malaysia 5,4%

12. Indonesia 5,2%

13. Sri Lanka 4,7%

14. Maldives 4,6%

15. Vanuatu 4,5%

16. Timor-Leste 4,0%

17. Thailand 3,7%

18. Papua New Guinea 3,1%

19. Solomon Islands 3,0%

20. Mongolia 2,0%

Economy %

1. Romania 5,5%

2. Turkey 5,1%

3. Malta 5,1%

4. Malta 5,1%

5. Estonia 4,0%

6. Luxembourg 3,9%

7. Poland 3,8%

8. Latvia 3,8%

9. Albania 3,7%

10. Bulgaria 3,6%

11. Kosovo 3.5%

12. Lithuania 3,5%

13. Slovak Rep. 3,3%

14. Sweden 3,1%

15. Serbia 3,0%

16. Montenegro 3,0%

17.Bosnia &

Herzegovina2,5%

18. Germany 2,0%

19. Russia 1,8%

20. Switzerland 0,3%

6Source: IMF. *Per capita GDP PPP based on WEO Report April 2015

Richest countries in the World & Regions – GDP per capita in 2017*

G

G G

G

Economy US$ int.

1. Qatar 124.93

2. Macao SAR 114.43

3. Luxembourg 109.19

4. Singapore 90.53

5. Brunei Darussalam 76.74

6. Ireland 72.63

7.United Arab

Emirates68.25

8. Switzerland 61.36

9. Hong Kong SAR 61.02

10. San Marino 60.36

11. United States 59.5

12. Saudi Arabia 55.26

13. Netherlands 53.58

14. Iceland 52.15

15. Bahrain 51.85

16. Sweden 51.26

17. Germany 50.21

18. Australia 49.88

19. Taiwan 49.83

20. Denmark 49.61

Latam

World ranking

Asia Europe

1. World perspectives

Economy US$ int.

1. Trinidad & T. 31.15

2. The Bahamas 25.08

3. Chile 24.59

4. Argentina 20.68

5. St. Kitts & Nevis 26.85

6. Uruguay 22.45

7. Panama 24.26

8. Mexico 19.48

9. Venezuela 19.32

10. Suriname 13.88

11. Barbados 17.51

12. Brazil 15.05

13. Costa Rica 17.16

14. Colombia 14.45

15. Dominican Rep. 16.97

16. Grenada 14.78

17. Peru 13.34

18. St. Lucia 13.58

19. Ecuador 11.23

20. St. Vincent & G. 11.62

Economy US$ int.

1.Brunei

Darussalam76.74

2. Malaysia 28.87

3. Palau 16.47

4. Maldives 19.18

5. Thailand 17.79

6. China 16.62

7. Mongolia 12.55

8. Indonesia 12.38

9. Sri Lanka 13.01

10. Fiji 9.86

11. Bhutan 8.72

12. Philippines 8.23

13. India 7.17

14. Vietnam 6.88

15. Samoa 5.74

16. Lao P.D.R. 7.37

17. Timor-Leste 5.01

18. Tonga 5.61

19. Myanmar 6.29

20. Bangladesh 4.21

Economy US$ int.

1. Luxembourg 109.19

2. Norway 70.59

3. San Marino 60.36

4. Switzerland 61.36

5. Ireland 72.63

6. Netherlands 53.58

7. Austria 49.88

8. Sweden 51.26

9. Germany 50.21

10. Denmark 49.61

11. Belgium 46.3

12. France 43.55

13. Finland 44.05

14. UK 43.62

15. Italy 37.97

16. Spain 38.17

17. Malta 42.53

18. Malta 42.53

19. Cyprus 36.56

20. Slovenia 34.06

7

G

Forecast for advanced and developing economies in 2015 & 2016

Source: IMF World Economic Outlook April 2015

1. World perspectives

3.5

2.4

1.5

2.3

4.3

6.6

0.9

4.5

3.8

2.4

1.7

2.3

4.7

6.4

2.0

5.1

World Advancedeconomies

Euro area Majoradvanced

economies(G7)

Emergingmarket anddevelopingeconomies

Emergingand

developingAsia

LatinAmerica and

theCaribbean

Sub-SaharanAfrica

2015 2016

8Source: IMF

1. World perspectives

Biggest Markets in 2014

1,3681,260

0200400600800

1000120014001600

Chin

a

Ind

ia

US

A

Ind

one

sia

Bra

zil

Pakis

tan

Nig

eria

Ban

gla

de

sh

Russia

Ja

pa

n

Me

xic

o

Phili

ppin

es

Eth

iop

ia

Vie

tna

m

Egyp

t

Germ

any

Cong

o

Ira

n

Tu

rkey

Th

aila

nd

Population

Million people

17.6 17.4

0

5

10

15

20

Chin

a

US

A

Ind

ia

Ja

pa

n

Germ

any

Russia

Bra

zil

Ind

one

sia

Fra

nce

UK

Me

xic

o

Italy

Kore

a

Sau

di A

rab

ia

Cana

da

Spa

in

Tu

rkey

Ira

n

Austr

alia

Ta

iwa

n

GDP

US$ trillions

17.1

- 2 4 6 8

10 12 14 16 18

Russia

Cana

da

US

Chin

a

Bra

zil

Austr

alia

Ind

ia

Arg

en

tin

a

Kaza

kh

sta

n

Alg

eri

a

Cong

o

Gre

en

land

Sau

di A

rab

ia

Me

xic

o

Ind

one

sia

Sud

an

Lib

ya

Ira

n

Mo

ngo

lia

Peru

Territory

Million square km

GDP Population Territory

China 1st 1st 4th

India 3rd 2nd 7th

USA 2nd 3rd 3rd

Brazil 7th 5th 5th

Russia 6th 9th 1st

9

Top economies by 2050

Source: PWC

1. World perspectives

2014 2030 2050

Rank Country GDP Country Projected GDP Country Projected GDP

1. China 17.632 China 36.112 China 61.079

2. USA 17.416 USA 25.451 India 42.205

3. India 7.277 India 17.138 USA 41.384

4. Japan 4.788 Japan 6.006 Indonesia 12.210

5. Germany 3.621 Indonesia 5.486 Brazil 9.164

6. Russia 3.559 Brazil 4.996 Mexico 8.014

7. Brazil 3.073 Russia 4.854 Japan 7.914

8. France 2.587 Germany 4.590 Russia 7.575

9. Indonesia 2.554 Mexico 3.985 Nigeria 7.345

10. UK 2.435 UK 3.586 Germany 6.338

11. Mexico 2.143 France 3.418 UK 5.744

12. Italy 2.066 Saudi Arabia 3.212 Saudi Arabia 5.488

13. Korea 1.790 South Korea 2.818 France 5.207

14. Saudi Arabia 1.652 Turkey 2.714 Turkey 5.102

15. Canada 1.579 Italy 2.591 Pakistan 4.253

10

CRB Commodities Chart - Foodstuffs

Source: CRB

1. World perspectives

11

World Energy consumption (in million tonnes oil equivalent)

Source: BP Statistical Review 2015. *Includes oil, biofuels, gas-to-liquids and coal-to-liquids. **Includes wind power, solar electricity and other renewables.

0

500

1000

1500

2000

2500

2013 2015 2020 2025 2030 20350

200

400

600

800

1000

1200

2013 2015 2020 2025 2030 2035

0

500

1000

1500

2000

2500

3000

3500

4000

2013 2015 2020 2025 2030 2035

0

50

100

150

200

250

300

350

400

2013 2015 2020 2025 2030 20350

100

200

300

400

500

600

2013 2015 2020 2025 2030 2035

0

100

200

300

400

500

600

2013 2015 2020 2025 2030 2035

1. World perspectives

North America S & C America Europe & Eurasia Middle East Africa Asia Pacific

Liquids* CoalNatural Gas

Nuclear energy Renewables**Hydroelectricity

12

World Energy production (in million tonnes oil equivalent)

Source: BP Statistical Review 2015. *Includes biofuels, wind power, solar electricity and other renewables.

1. World perspectives

North America S & C America Europe & Eurasia Middle East Africa Asia Pacific

Oil CoalNatural Gas

Nuclear energy Renewables*Hydroelectricity

0

200

400

600

800

1000

1200

1400

1600

1800

2013 2015 2020 2025 2030 20350

200

400

600

800

1000

1200

1400

2013 2015 2020 2025 2030 2035

0

500

1000

1500

2000

2500

3000

3500

4000

2013 2015 2020 2025 2030 2035

0

50

100

150

200

250

300

350

400

2013 2015 2020 2025 2030 2035

0

100

200

300

400

500

600

2013 2015 2020 2025 2030 2035

0

100

200

300

400

500

600

2013 2015 2020 2025 2030 2035

13

Latin America comparison in 2017*

1. World perspectives

Latin

AmericaUSA EU China

GDP PPP (US$ tr) 9,7 18,0 19,3 19,7

GDP PPP per capita (US$) 15.65 56,0 38,1 14,3

Exports (US$ tr)** 1,0 2,2 7,1 2,4

Imports (US$ tr)** 1,1 2,8 6,6 2,0

Real GDP growth (%) -0,03 2,6 2,3 6,9

Source: IMF and UNCTAD. *estimates by the IMF. **in 2013 total merchandise exports and imports according to UNCTAD.

14

Latam: regional trade blocks / agreements

1. World perspectives

Year 2017*

Mercosur(Argentina, Bolivia,

Brazil, Paraguay,Uruguay & Venezuela)

Pacific Alliance(Chile, Colombia,

Costa Rica,Mexico & Peru)

GDP PPP (US$ tr) 4.7 3,9

GDP PPP per capita (US$) 15.5 17,3

Exports (US$ bi) 0,3 0,5

Imports (US$ bi) 0,4 0,6

FDI (US$ bi)** 80 72

Long supply chain Short supply chain

Source: IMF and ITC Trademap. *IMF estimate.**in 2013.

15Source: Elaboration by IPDES. *IMF estimates.

Mexico

24,85%

Brazil

33,20%

Argentina,

Uruguay,

Paraguay,

Bolivia

11,75%

Colombia,

Ecuador, Peru,

Chile

18,3%

% Share of Latam GDP in 2017*

1. World perspectives

2. China in Latam & Brazil

16

17

Evolution of trade between China & Latin America

8.0

70.4

134.7

6.7

71.4

126.4

0

25

50

75

100

125

150

01 02 03 04 05 06 07 08 09 10 11 12 13 14

China exports to Latam China imports from Latam

US$ billions

-10

-8

-6

-4

-2

0

2

4

6

8

10

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Trade balance

US$ billions

If positive = surplus China

Source: ITC Trademap. Elaboration by IPDES.

2. China in Latam & Brazil

18

Trade by regions of Latam in 2016:

Source: ITC Trademap. *includes countries from the Caribbean. Elaboration by IPDES.

Imports from South

America = US$ 102,3 bi

Exports to South

America = US$ 113,1 bi

Imports from Central

America* = US$ 16,6 bi

Exports to Central

America* = US$ 51,1 bi

2. China in Latam & Brazil

19

Trade performance from 2001 till 2014

34

51.1

16.6

0

10

20

30

40

50

60

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Trade balance Exports to Latam

Imports from Latam

US$ billions

Central America South America

-26

83.6

109.8

-30

0

30

60

90

120

01 02 03 04 05 06 07 08 09 10 11 12 13 14

US$ billions

China with

consistent

surplus.

China with

consistent

deficit.

Source: ITC Trademap. Elaboration by IPDES.

2. China in Latam & Brazil

20

China’s largest trade partners in Latam (2016*)

Source: ITC Trademap. * for some countries data is for year 2013. Elaboration by IPDES.

China exports to Latam China imports from Latam

in

US$ bi

2. China in Latam & Brazil

China Total % Part.

1. Brazil 45,85 185,2 44,87%

2. Chile 18,6 59,8 18,20%

3. Mexico 10,3 373,8 10,08%

4. Peru 9,4 36 9,19%

5. Venezuela 5,5 29,3 5,38%

6. Argentina 5,11 57,7 5,00%

7. Colombia 2,5 30,9 2,44%

8. Uruguay 1,94 6,96 1,89%

9. Ecuador 0,93 16,79 0,91%

10. Costa Rica 0,69 9,9 0,67%

11. Panama 0,37 11,19 0,36%

12. Bolivia 0,32 7,08 0,31%

13. Cuba 0,27 1,51 0,26%

14. Honduras 0,27 4,08 0,26%

15. Dominican R. 0,13 8,74 0,12%

China Total % Part.

1. Brazil 21,97 137,5 20,29%

2. Mexico 32,3 387,0 29,84%

3. Chile 12,8 58,8 11,82%

4. Panama 6,34 20,9 5,85%

5. Argentina 7,20 55,60 6,65%

6. Colombia 6,75 44,88 6,23%

7. Peru 5,98 36,18 5,52%

8. Venezuela 2,51 15,42 2,31%

9. Ecuador 2,25 16,18 2,07%

10. Uruguay 1,77 8,13 1,63%

11. Guatemala 1,85 17,0 1,70%

12. Paraguay 1,69 9,75 1,56%

13. Cuba 1,78 6,82 1,64%

14. Costa Rica 1,49 15,32 1,37%

15. Dominican R. 1,56 17,78 1,44%

21

Slowdown in growth of China Exports & Imports to Latam

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Export % growth Import % growth

% y.o.y.

Source: ITC Trademap. Elaboration by IPDES.

2. China in Latam & Brazil

Export

% growth

Import

% growth

2004 54% 46%

2005 30% 23%

2006 53% 28%

2007 44% 50%

2008 39% 40%

2009 -21% -10%

2010 61% 42%

2011 33% 30%

2012 11% 5%

2013 -1% 1%

2014 1% 0%

2015 -3% -18%

2016 14% -1%

Average 24,2% 18,1%

22

Top China products exported & imported to Latamin US$ bi – in 2016

Source: ITC Trademap. Elaboration by IPDES.

2. China in Latam & Brazil

China top export products to Latam

1. Electrical, electronic equipment 53,1

2. Machinery, nuclear reactors, boilers, etc 30,0

3. Vehicles other than railway, tramway 7,0

4.Optical, photo, technical, medical, etc

apparatus 5,1

5. Organic chemicals 5,1

6. Plastics and articles thereof 4,8

7. Articles of iron or steel 4,0

8.Articles of apparel, accessories, knit or

crochet 3,7

9. Toys, games and sports requisites 3,4

10. Iron and steel 3,2

11. Furniture 3,0

12. Rubber and articles thereof 2,8

13. Footwear, gaiters & the like, parts thereof 2,7

14. Articles of apparel and clothing accessories 2,7

15. Commodities not elsewhere specified 2,3

China top imports from Latam

1. Ores, slag & ash 22,8

2. Oil seed, oleagic fruits, grain, seed, fruit, etc 17,4

3.Mineral fuels, mineral oils and products of

their distillation11,0

4. Copper & articles thereof 8,7

5.Pulp of wood, fibrous cellulosic material,

waste etc 3,3

6. Meat and edible meat offal 2,8

7. Edible fruit, nuts, peel of citrus fruit, melons 1,2

8. Vehicles other than railway rolling stock 1,1

9.Machinery, mechanical appliances,nuclear

reactors 1,0

10. Sugars 1,0

11. Residues and waste from the food industries 0,9

12.Electrical machinery and equipament and

parts thereof0,9

13. Raw hides and skins 0,7

14. Iron & steel 0,6

15. Fish and crustaceans 0,6

23

Latam structure of trade with China and the World

by technology intensity – 2013 – in %

Source: Cepal.

%

Exports Imports

2. China in Latam & Brazil

24

Latam share of main trading partners & projections

Source: Cepal – Taotao Chen & Miguel Ludena.

USA

EU

China

26,2%

13,5%

18,5%

USA

EU

China

32,9%

12,9%

16,1%

Imports Exports

2. China in Latam & Brazil

25

Destination of Chinese FDI* (2013) – in %

Source: World Resources Institute. *According to official data.

2. China in Latam & Brazil

26

Chinese FDI in Latam

1990-2009 2010 2011 2012 2013 2010-2013

Argentina 0,1 3,1 2,5 0,6 0,1 6,3

Brazil 0,3 9,6 5,7 6,1 2,6 23,9

Chile n.a. 0,01 0 0,1 0,02 0,1

Colombia 1,7 0,01 0,3 1,0 0,8 2,1

Ecuador 1,6 0,1 0,1 0,1 0,1 0,3

Guyana 1,0 n.a. 0,02 n.a. n.a. 0,02

Mexico 0,2 0,01 0 0,1 0,02 0,1

Peru 2,3 0,1 0,8 1,3 4,6 6,9

Trinidad & T. n.a. n.a. 0,9 n.a. n.a. 0,9

Venezuela 0,2 0,9 n.a. n.a. 1,4 2,3

Total 7,3 13,7 10,2 9,2 9,6 42,7

Estimated Chinese FDI in Latamin US$ bi

Source: Cepal – Taotao Chen & Miguel Ludena.

For China, Latam is

primarily a producer

of raw materials; this

shows in the

makeup of Chinese

FDI in the region.

Almost 90% of

estimated Chinese

investments

between 2010 & 2013

went to natural

resources.

Growing Chinese FDI

in industry.

2. China in Latam & Brazil

27

Credit to Latam – 2005-2014

Source: Inter-American Dialogue - China-Latin America Finance Database. * includes credit of US$ 3,5 bi given to Petrobras in 2015.

US$ bi

1. Venezuela 56,3

2. Brazil* 25,5

3. Argentina 19,0

4. Ecuador 10,8

5. Bahamas 2,9

6. Mexico 2,4

7. Peru 2,3

8. Jamaica 1,4

9. Bolivia 0,61

10. Costa Rica 0,40

11. Honduras 0,30

12. Chile 0,15

13. Guyana 0,13

14. Colombia 0,08

15. Uruguay 0,01

Total 122,28

A

2. China in Latam & Brazil

28Source: ITC Trademap.

Products exported (US$ bn) 2012 2013 2014

1. Oil seed, oleagic fruits, grain, seed, fruit 12,0 17,1 16,6

2. Ores, slag and ash 15,2 16,4 12,7

3. Mineral fuels, oils, distillation products 4,8 4,0 3,5

4. Pulp of wood, fibrous cellulosic material, waste 1,2 1,6 1,7

5. Sugars and sugar confectionery 1,1 1,4 0,9

6.Raw hides and skins (other than furskins) and

leather0,5 0,6 0,8

7. Iron and steel 0,7 0,6 0,5

8. Meat and edible meat offal 0,6 0,4 0,5

9.Animal,vegetable fats and oils, cleavage

products1,0 0,6 0,4

10. Tobacco and manufactured tobacco substitutes 0,5 0,5 0,3

Products imported (US$ bn) 2012 2013 2014

1. Electrical, electronic equipment 9,8 10,9 10,9

2. Machinery, nuclear reactors, boilers, etc 7,9 8,1 7,2

3. Organic chemicals 1,8 2,2 2,2

4. Iron and steel 0,8 1,0 1,4

5. Plastics and articles thereof 0,9 1,0 1,1

6. Vehicles other than railway, tramway 0,9 1,0 1,0

7. Articles of iron or steel 0,9 1,0 1,0

8.Articles of apparel, accessories, not knit or

crochet0,8 0,9 0,9

9. Manmade filaments 0,6 0,7 0,8

10. Optical, photo, technical, medical, etc apparatus 0,7 0,8 0,8

6.8 16.4

44.3 41.2

46.0

40.6

5.4

20.0

32.8 34.2 37.3 37.3

-6.0

-4.0

-2.0

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Trade balance Exports Imports

US$ billions

Brazil

trade

with

China:

2. China in Latam & Brazil

3. Brazil

29

Strategic location &

market

Area of 8,5 million km2.

202 million inhabitants.

GDP represents 35% of Latam.

Consumption market covers more than 700

million of potential consumers (Brazil,

Latam & North America).

Brazil borders almost all South

American countries.

Sustainable growth

Cleaner energy matrix.

Rising middle class.

Decreasing inequality.

Innovation & technology

Largest & most diversified science,

technology & innovation system in

Latam.

Competitive in sectors such as

aircraft & deep water oil exploration.

Notable in equipment production & medical

hospital services supply.

Infrastructure

Over 60 airports with annual flow higher than 100 million people.

46 ports with capacity for over 600 million

tons/year and rising.

Almost 30.000 km of railways.

Aprox. 2 million km of roads.

Expanding communications

structure with almost 300 million mobile

phone users.

New projects: PPP’s, privatization

programs.

Investment profitability

More generous regulamentory

framework.

Highly lucrative fixed income

market.

Undervalued assets in US$ terms.

Natural resources

Agribusiness powerhouse.

Rich in iron ore.

30

3. Brazil

Source: www.globalsmes.org. Elaboration by IPDES.

Reasons for investing in Brazil

31Source: BC

3. Brazil

Largest brewer in Latam. One of largest beer producers in the world.

World leader in meat production. World’s largest exporter of animal protein.

3rd lagest manufacturer of commercial jets in the world.

Largest long steel producer in the Americas and the 2nd largest in the world.

The only steel sheet producer in Brazil and the 5th

largest producer in the world.

Largest world producer of iron ore and 2nd largest of nickel.

Largest producer of thermoplastic resins in the Americas.

One of the 10 largest food companies in the world, exports to 140 countries.

Brazil with global players

32

Outlook for Brazil

Source: IPDES.

Downturn in the short run with rising interest rates &

unemployment.

New investments with government privatization

programs.

High performance by agribusiness sector.

New opportunities in oil & gas exploration.

Bigger middle class with increasing demands for quality.

Large market for vehicles & trucks.

Rising demand for healthcare & related products.

3. Brazil

33Source: IBGE. Elaboration by IPDES.

City

Population

(million

people)

State

1.São Paulo 11,9 SP

2.Rio de Janeiro 6,5 RJ

3.Salvador 2,9 BA

4.Brasília 2,9 DF

5.Fortaleza 2,6 CE

6.Belo Horizonte 2,5 MG

7.Manaus 2,0 AM

8.Curitiba 1,9 PR

9.Recife 1,6 PE

10.Porto Alegre 1,5 RS

11.Belém 1,4 PA

12.Goiânia 1,4 GO

13.Guarulhos 1,3 SP

14.Campinas 1,2 SP

15.São Luís 1,1 MA

16.São Gonçalo 1,0 RJ

17.Maceió 1,0 AL

Cities in Brazil with at least 1 million

people in 2014

Brazil & StatesPopulation (million

people)BRAZIL 202,8

NORTH REGION 17,2

Rondônia 1,7

Acre 0,8

Amazonas 3,9

Roraima 0,5

Pará 8,1

Amapá 0,8

Tocantins 1,5

NORTHEAST REGION 56,2

Maranhão 6,9

Piauí 3,2

Ceará 8,8

Rio Grande do Norte 3,4

Paraíba 3,9

Pernambuco 9,3

Alagoas 3,3

Sergipe 2,2

Bahia 15,1

SOUTHEAST REGION 85,1

Minas Gerais 20,7

Espírito Santo 3,9

Rio de Janeiro 16,5

São Paulo 44,0

SOUTH REGION 29,0

Paraná 11,1

Santa Catarina 6,7

Rio Grande do Sul 11,2

CENTRAL-WEST REGION 15,2

Mato Grosso do Sul 2,6

Mato Grosso 3,2

Goiás 6,5

Distrito Federal 2,9

Population in 2014Consumer markets in Brazil

3. Brazil

34Source: IBGE

Demographic projections:Population evolution by age group & gender (in million people)

4944

3935

3228

1520

30

40

51

58

0

10

20

30

40

50

60

70

2013 2020 2030 2040 2050 2060

mil

lio

n p

eo

ple

0-14 years 65 + years

138

148

154 153

143

131

120

125

130

135

140

145

150

155

160

2013 2020 2030 2040 2050 2060

Mil

lio

n p

eo

ple

15-64 years

201.0

212.1

223.1

228.2 226.3

218.2

2013 2020 2030 2040 2050 2060

Total

population

(million people)

3. Brazil

35Source: IBGE

Demographic projections:Population evolution by age group & gender (in million people)

17,8

17,4

17,5

15,7

12,6

9,4

5,4

4,0

17.0

16.9

17.3

15.8

13.1

10.2

6.3

5.6

0-10

11-20

21-30

31-40

41-50

51-60

61-70

70-+

Men Women

2013 2020 2060

16,2

16,8

17,1

17,2

14,1

11,2

7,3

5,3

15.4

16.2

16.8

17.3

14.6

12.0

8.4

7.5

Men Women

10,4

10,6

11,8

12,8

14,0

15,1

13,9

18,8

9.9

10.2

11.3

12.4

13.8

15.4

15.1

25.3

Men Women

3. Brazil

36

Growing middle class

Source: BC. * FGV projection.

3. Brazil

37Source: Bradesco

New investments announced:

3. Brazil

38

FDI to & out of Brazil by country

Source: Brazil Central Bank,

To Brazil between 2006-2014 US$ bi1.The Netherlands 78,6

2.USA 67,5

3.Luxemburg 38,5

4.Spain 31,9

5.Japan 24,7

6.France 20,2

7.Switzerland 20,0

8.UK 11,9

9.Canada 11,5

10.Germany 11,3

11.Chile 10,1

12.Cayman Islands 8,6

13.Portugal 8,3

14.British Virgin Islands 6,2

15.Norway 6,0

16.Austria 5,7

17.Bermudas 5,5

18.Australia 5,3

19.South Korea 5,1

20. Italy 4,7

21.Hong Kong 3,4

22.Mexico 3,1

23.The Bahamas 2,9

24.Sweden 2,8

25.Uruguay 2,5

Out of Brazil between 2006-2014 US$ bi1.Cayman Islands 36,0

2.USA 24,7

3.Canada 16,2

4.The Netherlands 15,4

5.British Virgin Islands 8,7

6.Austria 8,1

7.The Bahamas 7,2

8.Portugal 6,2

9.Argentina 5,6

10.Panama 5,3

11.Luxemburg 5,2

12.Chile 3,7

13.Spain 3,5

14.UK 2,4

15.Uruguay 2,0

16.France 1,7

17.Switzerland 1,6

18.Bermudas 1,5

19.Dominican Rep. 1,4

20.Mexico 1,3

21.Hungary 1,2

22.Dutch Antilles 1,1

23.Colombia 0,9

24.Peru 0,8

25.Denmark 0,8

38

3. Brazil

39Source: International Council on Cleal Transportation – ICCT.

Federal Government program to increase innovation:

Inovar Auto: new automotive regime

• In Oct/2012, the Brazilian government approved by decree a new program to encourage

vehicle technology innovation. Inovar-Auto fosters industry competitiveness by

encouraging automakers to produce more efficient, safer, and technology- advanced

vehicles while investing in the national automotive industry.

• Inovar-Auto provides these incentives in two ways. It first increases a tax on

industrialized products (IPI) by 30% for all light-duty vehicles (LDVs) and light

commercial vehicles. Second, it imposes a series of requirements for automakers to

qualify for up to 30% discount in the IPI. In other words, IPI taxes will remain

unchanged for those manufacturers that meet the requirements, thus incentivizing

investments in vehicle efficiency, national production, R&D, and automotive

technology. The program is limited to vehicles manufactured between 2013 and 2017,

after which IPI rates return to pre-2013 levels unless modifications to the decree are

made.

3. Brazil

40Source: International Council on Cleal Transportation – ICCT.

Federal Government program to increase innovation:

Inovar Auto: strengthening the local supply chain

Automakers need to conduct a minimum number of manufacturing and engineering

infrastructure activities for at least 80% of produced light-duty and light commercial

vehicles in Brazil. The activities considered are the following:

• Stamping

• Welding

• Anticorrosion treatment and painting

• Plastic injection

• Motor manufacturing

• Gearbox and transmission manufacturing

• Steering and suspension systems assembly

• Electrical systems assembly

• Axle and brake systems assembly

• Monoblock manufacturing or chassis

assembly

• Assembly, final review and testing

• Own laboratory infrastructure for product

development and testing

3. Brazil

Source: IPDES

INOVAR-AUTO rules at one glance Color code:

*OEM can choose 2 of the 3 criteria [(3),(4),(5)]. N.A.: not applicable.

3. Brazil

42Source: BNDES

BNDES Bank perspectives for investments till 2018 (in R$ bi)

Sector 2010-2013 2015-2018%

VariationOil & Gas 358 509 42,1

Mineral extraction 44 40 -8,0

Automotive 58 59 0,4

Paper & Cellulose 20 21 2,5

Chemical industry 22 22 2,6

Steel making 25 12 -50,3

Electronics 22 28 25,9

Health industry complex 12 13 11,9

Aviation 4 12 187,0

Food 58 49 -15,8

Sugarcane 41 25 -40,5

Other industries 112 121 8,0

Industry 775 909 17,3Electrical energy 191 192 0,5

Telecommunications 102 141 37,8

Sanitation 53 87 64,6

Road transport 62 80 29,1

Railways 23 45 98,9

Ports 15 36 141,0

Airports 11 16 49,5

Infrastructure 457 598 30,8

Housing 810 963 19,0

Agriculture & Services 1.469 1.631 11,0

Total 3.511 4.101 16,8

3. Brazil

43Source: Empresa de Pesquisa Energética – EPE

Energy matrix in Brazil: projection till 2023

83.2% 83.8%

16.8% 16.2%

2014 2023

Renewable sources Non-Renewable sources Expected investments

in R$ billions

Period 2014-2023

Supply of electrical energy 301

Generation 223

Transmission 78

Petroleum & Natural Gas 879

Exploration & production of

Petroleum & Natural Gas

778

Supply of petroleum derivatives 98

Supply of Natural Gas 3

Supply of liquid biofuels 82

Ethanol – production plants 75

Ethanol - pipeline and port

infrastructure

7

Biodiesel – production plants 1

Total 1.263

3. Brazil

44Source: State of São Paulo.*estimates based on BP statistical review 2013 data.

Energy matrix World vs Brazil

91.7%

8.3%

World Brazil

World energy matrix (2012)Share of Brazilian renewable

energy (2012)*

Oil, 33.1%

Coal, 29.9%

Natural Gas, 23.9%

Hydro-electricity,

6.7%

Nuclear Energy,

4.5%

Renewables, 1.9%

3. Brazil

45

Macro data:

Source: IMF, Itaú. *estimates by the IMF & Itaú.

2011 2012 2013 2014 2015* 2016*

GDP growth (%) 3,9 1,8 2,7 0,1 -1,7 0,3

GDP (US$ bi) 2.611 2.411 2.388 2.345 1.932 1.860

GDP per capita (US$) 13.229 12.101 11.878 11.566 9.452 9.027

Inflation (%) 6,5 5,8 5,9 6,4 8,8 5,5

Interest rate (%) 11,00 7,25 10,00 11,75 14,25 12,00

Unemployment (%) 6,0 5,5 5,4 4,9 6,5 7,8

Current Account (% GDP) -2,0 -2,2 -3,4 -4,4 -4,1 -3,7

FDI (% GDP) 2,7 3,2 3,4 4,1 3,4 4,1

Exchange Rate (R$ / US$) 1,87 2,05 2,36 2,66 3,20 3,50

International Reserves (US$ bi) 352 379 376 374 370 395

Public Debt gross (% GDP) 61,2 63,5 62,2 65,2 66,2 66,2

Public Debt net (% GDP) 34,5 32,9 31,5 34,1 35,5 36,0

3. Brazil

46

Macro data:

Source: Itaú. *estimates by Itaú.

3. Brazil

GDP growth (%) Unemployment (%)Inflation (%)

Interest rate (%)Public primary surplus &

nominal deficitCurrent Account (% GDP)

6.05.0

-0.2

7.6

3.9

1.82.7

0.1

-1.7

0.3

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16*

4.0

5.0

6.0

7.0

8.0

9.0

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16*

4.0

5.0

6.0

7.0

8.0

9.0

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16*

7.00

9.00

11.00

13.00

15.00

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16* -5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16*

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15*

20

16*

Nominal D.

Primary S.

47

Structure of GDP – 1996-2015

Source: IBGE

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Agriculture

18.0%

20.0%

22.0%

24.0%

26.0%

1T

1996

3T

1998

1T

2001

3T

2003

1T

2006

3T

2008

1T

2011

3T

2013

Industry

8.0%

10.0%

12.0%

14.0%

16.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Industry -Transformation

52.0%

54.0%

56.0%

58.0%

60.0%

62.0%

64.0%

66.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Services

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Private Consumption

16.0%

18.0%

20.0%

22.0%

24.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Public Consumption

13.0%

15.0%

17.0%

19.0%

21.0%

23.0%

25.0%1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Investment

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

19.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Exports

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

1T

1996

1T

1998

1T

2000

1T

2002

1T

2004

1T

2006

1T

2008

1T

2010

1T

2012

1T

2014

Imports

Supply side (in % of GDP)

Demand side (in % of GDP)

3. Brazil

48Source: ITC Trademap. *projection.

Total Exports (US$ bi)

Year Value % Var.

2005 118,5 -

2006 137,8 16,3%

2007 160,6 16,6%

2008 197,9 23,2%

2009 153,0 -22,7%

2010 197,4 29,0%

2011 256,0 29,7%

2012 242,6 -5,3%

2013 242,2 -0,2%

2014 225,1 -7,1%

2015* 195,0 -13,4%

Products 2010 2011 2012 2013 2014

1. Ores, slag and ash 30,8 44,2 33,2 35,1 28,4

2. Mineral fuels, oils, distillation products 19,8 31,6 31,4 22,4 25,2

3. Oil seed, oleagic fruits, grain, seed, fruit 11,2 16,5 17,7 23,0 23,5

4. Meat and edible meat offal 11,9 13,7 13,7 14,8 15,4

5. Machinery, nuclear reactors, boilers 10,9 14,1 13,9 12,9 12,7

6. Vehicles other than railway, tramway 12,1 13,8 12,6 14,1 9,8

7. Sugars and sugar confectionery 13,0 15,2 13,0 12,0 9,6

8. Iron and steel 8,4 12,0 10,7 8,4 9,6

9. Residues, wastes of food industry, animal fodder 5,0 6,0 6,9 7,1 7,4

10.Coffee, tea, mate and spices 5,4 8,3 6,0 5,0 6,5

11.Pulp of wood, fibrous cellulosic material, waste 4,8 5,0 4,7 5,2 5,3

12.Cereals 2,6 4,0 6,6 7,1 4,4

13.Electrical, electronic equipment 5,0 5,1 4,9 4,7 4,2

14.Aircraft, spacecraft, and parts thereof 4,4 4,3 5,2 4,4 4,1

15.Plastics and articles thereof 3,2 4,0 3,7 3,5 3,6Country 2010 2011 2012 2013 2014

1. China 30,8 44,3 41,2 46,0 40,6

2. USA 19,2 25,9 26,8 24,9 27,1

3. Argentina 18,4 22,7 18,0 19,6 14,3

4. Netherlands 10,2 13,6 15,0 17,3 13,0

5. Japan 7,1 9,5 8,0 8,0 6,7

6. Germany 8,1 9,0 7,3 6,6 6,6

7. Chile 4,2 5,4 4,6 4,5 5,0

8. India 3,5 3,2 5,6 3,1 4,8

9. Venezuela 3,8 4,6 5,1 4,8 4,6

10. Italy 4,2 5,4 4,6 4,1 4,0

External sector: Exports

Main products exported – (US$ bi)

Top markets (destinations)

– in US$ bi

3. Brazil

49Source: ITC Trademap. *projection.

Total Imports (US$ bi)

Year Value % Var.

2005 73,6 -

2006 91,3 24,1%

2007 120,6 32,1%

2008 173,2 43,6%

2009 127,6 -26,3%

2010 180,5 41,4%

2011 226,2 25,4%

2012 223,1 -1,4%

2013 239,6 7,4%

2014 229,1 -4,4%

2015* 189,0 -17,5%

Products 2010 2011 2012 2013 2014

1. Mineral fuels, oils, distillation products 30,0 42,0 40,2 45,7 45,0

2. Machinery, nuclear reactors, boilers 28,3 33,7 34,7 35,8 31,9

3. Electrical, electronic equipment 22,2 26,4 25,5 28,3 27,0

4. Vehicles other than railway, tramway 16,6 22,6 21,3 22,4 19,5

5. Organic chemicals 8,4 9,4 9,9 10,7 10,7

6. Plastics and articles thereof 6,5 8,1 8,0 8,8 8,8

7. Fertilizers 4,9 9,1 8,6 8,9 8,4

8. Pharmaceutical products 6,1 6,5 6,8 7,4 7,4

9. Optical, photo, technical, medical, etc apparatus 6,1 6,3 6,5 7,1 6,8

10.Miscellaneous chemical products 3,0 3,8 4,1 5,0 5,4

11.Rubber and articles thereof 4,0 5,1 4,5 4,8 4,1

12.Articles of iron or steel 3,1 3,6 3,9 4,6 4,1

13. Iron and steel 4,7 4,0 3,7 3,2 3,4

14.Aircraft, spacecraft, and parts thereof 2,3 2,5 2,9 2,9 2,6

15.Cereals 2,1 2,4 2,4 3,1 2,4Country 2010 2011 2012 2013 2014

1. China 25,5 32,8 34,2 37,3 37,3

2. USA 27,2 34,2 32,6 36,3 35,3

3. Argentina 14,4 16,9 16,4 16,5 14,1

4. Germany 11,8 15,2 14,2 15,2 13,8

5. Nigeria 5,9 8,4 8,0 9,6 9,5

6. South Korea 8,4 10,1 9,1 9,5 8,5

7. India 4,2 6,1 5,0 6,4 6,6

8. Italy 4,8 6,2 6,2 6,7 6,3

9. Japan 7,0 7,9 7,7 7,1 5,9

10. France 4,8 5,5 5,9 6,5 5,7

External sector: Imports

Main products imported – (US$ bi)

Top markets (origins)

– in US$ bi

3. Brazil

35.6%

12.9%

48.7%

50Source: Ministry of Foreign Commerce – MDIC.

Product categories of exports

% share in 2014

Region Value Part. %

1. Asia 73,5 32,7%

2. Latam & Caribbean 46,1 20,5%

-Mercosul 25,1 11,1%

3. European Union 42,1 18,7%

4. US 27,1 12,1%

5. Africa 9,7 4,3%

6. Middle East 10,4 4,6%

7. Eastern Europe 4,6 2,0%

Major export markets of Brazil

(US$ bi) 2014

Major import markets of Brazil

(US$ bi) 2014

Region Value Part. %

1. Asia 71,2 31,1%

2. European Union 46,7 20,4%

3. Latam & Caribbean 37,6 16,4%

- Mercosul 18,5 8,1%

4. US 35,3 15,4%

5. Africa 17,1 7,4%

6. Middle East 8,0 3,5%

7. Eastern Europe 4,0 1,7%

Product categories of imports

% share in 2014

Basic

s

Semi.Manufa

ct.

82.8%

3.4%

13.8%

Basics

Semi.Manufa

ct.

3. Brazil

4. Opportunities

51

52Source: The Economist.

4. Opportunities

Financial Markets

• Devaluation of exchange rate

has made assets in Brazil

more attractive.

• Rising interest rates should

make fixed income

investments desirable.

• Rebound expected for Brazil

in 2016.

53Source: ATKearny

E-Commerce: Global retail E-commerce index

4. Opportunities

54

Source: Petrobrás

Oil & Gas: Petrobras & Pre-salt exploration

What is Pre-salt?• Large reservoirs of oil and natural gas.

• Located between 5,000 and 7,000 meters below sea level and 300 km from the coast.

• Water depths that can exceed 2,000 meters from the water line.

• Under a layer of salt that is more than 2,000 meters deep, in some areas.

• Characteristics of the oil: light (30º API) and variable content of CO2 (between 1 and 20%).

4. Opportunities

55Source: Petrobrás

Oil & Gas: Petrobras & Pre-salt exploration

Pre-salt and world demand energy growth

4. Opportunities

56Source: Petrobrás. *includes investments abroad. **includes distribution.

Oil & Gas: Petrobras & Pre-salt exploration

Petrobrás 2015-2019 Business and Management Plan

Segments Investments %

Exploration & Production* 108,6 83%

Downstream** 12,8 10%

Gas & Power 6,3 5%

Other areas 2,6 2%

Total 130,3 100%

4. Opportunities

Source: ABAG

Agribusiness in Brazil’s economy

Brazil - Total Agribusiness

Exports Imports Balance Exports Imports Balance

2008 197,9 172,9 24,9 71,8 11,8 60,0

2009 152,9 127,7 25,2 64,7 9,8 54,9

2010 201,9 181,7 20,1 76,4 13,4 63,0

2011 256,0 226,2 29,7 94,9 17,5 77,4

2012 242,5 223,1 19,4 95,8 16,4 79,4

2013 242,1 239,6 2,5 99,9 17,0 82,9

2014 225,1 229,0 -3,9 96,7 16,6 80,1

57

Evolution of Brazil’s Agribusness

(% of GDP)

Pork

Production of meats (in million tonnes)

Beef Poultry

Area – million ha

Production – million tonnesa

Area & Production of grains

4. Opportunities

Source: MAPA, Fiesp. *All in million tons with exception of ethanol (in billion liters) **meats = chicken, cattle and suines. ***forecast for 2024/25 compared to 2014/15.

4 F’s: Food, Feed, Fuel and Fibre

Product* 2013/14 2023/24 Growth

Soy 86,1 140,1 63%

Wheat 7,4 19,1 158%

Orange 16,3 25,7 58%

Meats** 26,0 40,6 56%

Sugar 37,9 62,1 64%

Ethanol 25,5 42,8 68%

Celulose 26,5 37,2 40%

Production forecast 2014-2024

Composition of the agribusiness sector:

Food

FeedFuel

Fiber

Agribusiness

4. Opportunities

59

Global Soy-bean trade

Source: Fiesp.

4. Opportunities

60Source: MAPA

Market leaders in agribusiness – Projections for 2024

Corn

Million

tons

% Share in

world

market

USA 57,2 39,4

Brazil 31,9 22,0

Argentina 24,1 16,6

Russia & former soviet

block25,7 17,7

Total exports 145 100

Soybeans

Million tons% Share in

world market

Brazil 65,2 43,0

USA 48,7 32,1

Argentina 16,3 10,7

Other South America 12,5 8,2

Total exports 151,7 100

Beef

Million tons% Share

in world market

Brazil 2,9 28,9

India 2,6 25,6

USA 1,5 15,5

Australia 1,5 15,1

Others 1,5 9,1

New Zeland 0,6 5,8

Total exports 10 100

Chicken

Million tons% Share in

world market

Brazil 5,8 48,9

USA 4,3 36,1

Russia & former soviet block 1,2 9,9

Thailand 1,0 8,1

China 0,6 4,7

Total exports 11,8 100

Pork

Million tons% Share in

world market

USA 2,9 36,9

EU 2,4 30,8

Canada 1,4 17,2

Brazil 0,8 10,0

China 0,4 4,9

Total exports 7,9 100

4. Opportunities

61

Source: Fiesp.

Pulp market projections - 2024

Eucalyptus plantation area for

pulp production

Increase of 29% of planted area

Supply and demand of pulp

+ 58% in production

+27% in domestic consumption

+90% in net exports

4. Opportunities

62

Source: PPI

Rotation and Income of species producing pulp and cellulose short fiber

Species CountryRotation

(Years)

MAI - M³s/ha.a

Medium annual increase

Eucalyptus clone Brazil 7 35-55

Eucalyptus grandis Brazil 7 25-45

Eucalyptus grandis S. Africa 8-10 20

Eucalyptus globulus Chile 10-12 20

Eucalyptus globulus Portugal 12-15 12

Eucalyptus globulus Spain 12-15 10

Betula Sweden 35-40 5.5

Betula Finland 35-40 4

Productivity advantage: Pulp & paper

4. Opportunities

63

Source: Bracelpa

Brazil: Productivity and Sustainability

j

j

j

4. Opportunities

64Source: IBGE, Bradesco. *projections.

Civil construction growth and projection

2004-2016

11.0

-2.2-1.0

9.1

4.8

7.5

13.1

8.3

2.8

4.7

-2.6

-5.7

2.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

%

• Recent downturn should

end by middle of 2016.

• Expected negative growth

in nominal prices for

property in 2015.

• Due to recent devaluation

of exchange rate, assets in

US$ terms are becoming

more attractive.

• Continued demand for new

housing expected because

of housing deficits.

4. Opportunities

65

Source: BCB.

Automotive sector performance

1.00

1.50

2.00

2.50

3.00

3.50

4.00

De

c-9

3

De

c-9

4

De

c-9

5

De

c-9

6

De

c-9

7

De

c-9

8

De

c-9

9

De

c-0

0

De

c-0

1

De

c-0

2

De

c-0

3

De

c-0

4

De

c-0

5

De

c-0

6

De

c-0

7

De

c-0

8

Dec-0

9

De

c-1

0

De

c-1

1

De

c-1

2

De

c-1

3

De

c-1

4

mil

lio

ns

Vehicles total production - units

Sales of vehicles - total (units)

• Production of vehicles

reached almost 4 million

units.

• Lower production expected

in 2015.

• Tighter credit & higher

interest rates are affecting

sales.

• Slower economic activity

in 2015 having significant

impact on production.

• Brazil’s domestic market

should continue to attract

foreign investment in the

long term.

4. Opportunities

66

Source: ANFAVEA

Flex Fuel

0

500

1000

1500

2000

2500

3000

3500

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

Total vehicle production by fuel type

Gasoline Ethanol Flex fuel Diesel

Thousand units

4. Opportunities

67

Source: ANFAVEA

Automotive sector performance

0

5,000

10,000

15,000

20,000

25,000

jan-0

0

jan-0

1

jan-0

2

jan-0

3

jan-0

4

jan-0

5

jan-0

6

jan-0

7

jan-0

8

jan-0

9

jan-1

0

jan-1

1

jan-1

2

jan-1

3

jan-1

4

jan-1

5

Production of trucks– in units

0

2,000

4,000

6,000

8,000

10,000

12,000

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Production of agriculture machines – in units

4. Opportunities

68Source: ANFAVEA.

4. Opportunities

Agricultural machinery performance: production in units

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Wheel Tractors

050

100150200250300350400450

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Crawler Tractors

0

50

100

150

200

250

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Tillers

0

200

400

600

800

1000

1200

1400

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Combines

0

200

400

600

800

1,000

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Loaders & Backholes

69Source: ANFAVEA.

Worldwide vehicle fleet – in thousand units

Vehicle

fleet

Inhabitants

per vehicles

4. Opportunities

70

Insurance market in 2015*

in R$ billions

Source: Valor

Outlook:Prospects are most promising for the

sale of life insurance products, given low

penetration rates in the growing

middlemarket consumer segment. The

relatively young populations across the

region add to the long-term growth

prospects of selling both life insurance

and retirement products.

Health sector

146

99.8

69.9

30.3

23.6

0

50

100

150

200

250

300

350

400

Complementary health Private insurance

General insurance Life & accident insurance

Capitalization

Indicators:

• R$ 19,6 billions in net profit.

• 42,7% and 28,4% profit growth

in helath and capitalization.

4. Opportunities

71Source: Mckinsey.

Pharmaceuticals:

Despite

macroeconomic

deceleration, it is

expected that

Brazil's pharma

market should

grow 7–10 percent

per year until

2020.

4. Opportunities

72Source: Mckinsey.

Pharmaceuticals:

Retail pharma market: projected growth

4. Opportunities

73Source: Mckinsey.

Pharmaceuticals:

Institutional public pharma market: projected growth

4. Opportunities

74Source: Mckinsey.

Pharmaceuticals:

Institutional private pharma market: projected growth

4. Opportunities

75Source: Transparencymarketresearch.

Latin America Home Healthcare Market Expected to Reach USD 17.5 Billion in 2020

Home healthcare market comprises medical devices and services that are used for the diagnosis and mitigation

of variety of chronic diseases such as diabetes, respiratory infections, cardiovascular diseases and others.

4. Opportunities

76Source: EIU.

Latin America: Healthcare outlook

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Life expectancy, total (yrs) 73.8 74.0 74.2 74.5 74.7 74.9 75.1 75.4 75.6 75.8

Male 70.5 70.7 71.0 71.2 71.4 71.7 71.9 72.1 72.3 72.5

Female 77.2 77.4 77.7 77.9 78.1 78.3 78.5 78.8 79.0 79.2

Infant mortality rate (per 1,000 live births) 22.6 22.0 21.4 20.8 20.2 19.6 19.1 18.6 18.1 16.6

Doctors (per 1,000 pop) 1.7 1.8 1.8 1.8 1.8 1.9 1.9 2.0 2.0 2.1

Healthcare spending (US$ per head) 647.3 648.1 804.2 908.6 883.1 938.5 1,004.5 1,067.4 1,117.8 1,184.3

Healthcare spending (% of GDP) 7.2 7.9 7.9 8.0 8.0 8.1 8.1 8.0 8.0 8.1

Pharmaceuticals sales (US$ bn)&SUPd; 55.9 55.7 61.6 69.9 74.0 78.0 83.5 89.2 95.3 101.8

Pharmaceuticals sales (% change) 14.8 -0.3 10.6 13.5 5.8 5.4 7.1 6.8 6.9 6.9

4. Opportunities

77

Aviation and defence: Embraer

Source: Embraer

Aircraft Deliveries

Revenues

Investments

4. Opportunities

78

Military Transport – KC 390

Source: Embraer

Combat: Super Tucano

Aviation and defence: Embraer

4. Opportunities

79

Aviation and defence

Source: Embraer

S

New Legacy 500 by Embraer

4. Opportunities

80

Source: Federal Government

Air travel

4. Opportunities

Azul company

bought share

participation in

TAP airline and

United Airlines

invested US$

100 millions in

Azul!

a

81

Telecommunications

Source: Anatel

Evolution of the mobile lines (SMP) Distribution of access of mobile lines –

prepaid and contract

4. Opportunities

82

Telecommunications

Source: Anatel

Competition in mobile phone market - 2015

4. Opportunities

Brazil’s characteristics:

Respect to democratic institutions and international laws.

Peace promotion: Brazil has historically friendly and peaceful relations with its 10

neighbours.

Hospitality

Affectivity

Sense of humor

Flexibility

Among the Brazilian characteristics are:

Everyone feels at home in Brazil!

You feel at home

FRIENDSHIP

Brazilian attitude and well-being

83

5. IPDES

84

85

IP Desenvolvimento Empresarial e Institucional – IPDES

• Is a consulting company, a think tank of conceptions, focused on the development of businesses and strategies forcompanies and institutions. As a global advisor follows the internationalization of companies in Brazil, Mercosur andPacific Alliance countries, reaching Latin America, the European Union and the United States, among others.

• In the business field, it develops and coaches partnership projects seeking opportunities in new markets, jointventures, investments and location studies.

• As an strategic advisor develops scenarios, verifies strategies and build up options based on the different futurevisions.

• In the institutional area it develops strategies for global organizations and conceptualizes and organizes forums,developing themes related to sustainability and innovation, economic and regional topics, as well as the elaboration ofspecific studies for different sectors.

• IP Desenvolvimento has the purpose of coordinating and supporting efforts in business and institutional areas focusingon changes that began in Brazil, with the prominent internationalization of its economy.

Thank You

Muito Obrigado

Merci Beaucoup

Muchas Gracias

Danke Schön

Grazie Mille

本当にありがとうございます

شكرا جزيال

תודה רבה

Σε ευχαριστώ πάρα πολύ

86

IP Desenvolvimento Empresarial e Institucional Ltda.

Av. Brig. Faria Lima, 1903 cj 52/53

01452-001 São Paulo – SP

Brasil

Tel: 55-11- 3812-7088

investimentos@ipdes.com.br

www.ipdes.com.br

87