Brazil: Sustainable
GrowthMin. Guido Mantega
April 2010
Source: The EconomistProduced by: Ministry of Finance
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* The Economist forecast** Government forecast
Brazil: one of the fastest growing economies in 2010GDP growth forecast – selected countries – in % of GDP
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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
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Source: CAGED /MTEProduced by: Ministry of Finance
* Government forecast of 1.8 million for 2010, of which 657,259 comprised within the accumulated year period up to Mar-2010
Robust employment generation and more formal jobsNet employment generation – in thousands of workers
Source: PME/IBGEProduced by: Ministry of Finance
2010: the smallest unemployment rate in a time seriesUnemployment rate – in % of economically active population
Source: MDS, MTE and CPS/FGVProduced by: Ministry of Finance
New middle class and Brazilian unificationSocial class distribution - in % of population
Source: Kantar World PanelProduced by: Ministry of Finance
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
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Highest employment rate in the worldNet employment generation forecast for Q2 2010*
Source: Manpower Consulting Produced by: Ministry of Finance
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 for the Q2 2010 based on interviews with 850 companies in Brazil
Purchasing power of minimum wageToday’s minimum wage buys more products – in numbers of staple food baskets
Source: DIEESEProduced by: Ministry of Finance
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Fontes: IDVProduced by: Ministry of Finance
Dinamycs of Brazilian domestic demandRetail sales – selected countries - % change from 2008 to 2009
Source: IBGEProduced by: Ministry of Finance
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Retail Sales - PMC% change from preceding every 12-month period
* Including automobiles, motorcycles, parts and pieces, and construction materials
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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)
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Investment enhancement
Source: IBGE Produced by: Ministry of Finance
% change from preceding year
* Ministry of Finance Forecasts
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Federal Government and State-Owned Companies Investment
Source: Ministry of FinanceProduced by: Ministry of Finance
Cash basis - % of GDP
* Ministry of Finance Forecasts
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Industry investment volume
Source: BNDESProduced by: Ministry of Finance
Industry resource distribution - realized and planned by sector of activity
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Decade of infrastructure to come
Source: Exame Infrastructure Yearbook 2009-2010Produced by: Ministry of Finance
Investments in R$ billions
Source: Abecip and CAIXAProduced by: Ministry of Finance
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Construction growth in BrazilAverage number of contracts by presidential terms
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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
Fontes: IBGE and Brazilian Central Bank Produced by: Ministry of Finance
Evolution of inflation index, target and expectations% % change from every 12-month period
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* Market Forecasts FOCUS Report from April 9th, 2010
2020
Decomposition of Monthly Inflation (% change)
Source: IBGE. Elaborated by: MF/SPE
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9Remaining itens Fuel (ethanol and gasolines)
Tranport (tickets and fares) Food (in house)
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Sustainable PAC: reduction of public debtFiscal results – primary surplus and nominal deficit/surplus - in % of GDP
Source: Brazilian Central Bank and The EconomistProduced by: Ministry of Finance
* Ministry of Finance Forecasts
**
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Sustainable nominal deficit: reduction of public debtNominal deficit - in % of GDP
Source: The EconomistProduced by: Ministry of Finance
* Ministry of Finance Forecasts in February, 2010 ** G-20 nominal deficit average refers to Apr 15th, 2010 ed.
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Sustainable PAC: reduction in public debtPublic Sector Net Public Debt - in % of GDP
Source: Brazilian Central BankProduced by: Ministry of Finance
* Ministry of Finance Forecasts in February, 2010
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IIF Ranking on Investors Relation and Data Transparency
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Deficit in Current Account does not bind growth, nor increase external vulnerabilityCurrent Account – in US$ billions and % do PIB
Source: Brazilian Central BankProduced by: Ministry of Finance
* Government Forecasts
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Lower external vulnerabilityInternational reserves and external debt - in % of GDP and index
Source: Brazilian Central BankProduced by: Ministry of Finance
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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.
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