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Brazil – Norway Outlook of the Brazilian Economy

Brazil – Norway Outlook of the Brazilian Economy. Ambassador Sérgio Eduardo Moreira Lima MIB Forum, NHH, Bergen, 24 October 2007. 50% of South America’s territory (70% of MERCOSUL) 8.5 million Km 2 50% of South America’s population (71.3 % of MERCOSUL) 190 million people

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Brazil – Norway Outlook of the Brazilian Economy

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  1. Brazil – NorwayOutlook of the Brazilian Economy Ambassador Sérgio Eduardo Moreira Lima MIB Forum, NHH, Bergen, 24 October 2007

  2. 50% of South America’s territory (70% of MERCOSUL) 8.5 million Km2 50% of South America’s population (71.3 % of MERCOSUL) 190 million people 50% of South America’s GDP US$ 1.1 trillion (2006) LOCATION Guyana Venezuela Suriname Colombia French Guyana Ecuador Brazil Peru Bolivia Paraguay Argentina Chile Uruguay

  3. World Largest EconomiesGDP (real exchange rates) - US$ Billion 1. USA 13.001.000 2. Japan 4.340.000 3. Germany 2.906.000 4. China 2.668.000 5. U.K. 2.345.000 6. France 2.230.000 7. Italy 1.844.000 8. Canada 1.251.000 9. Brazil 1.068.000 Sources: Bloomberg / IMF / International Herald Tribune (Oct.15th 2007)

  4. AS BRAZIL OVERCOMES ITS CHALLENGES POLITICAL The 80s was a decade of consolidation of democracy.

  5. ….BUSINESS OPPORTUNITIES KEEP OPENING UP. ECONOMIC The 90s was marked by overcoming inflation and bringing currency stability.

  6. BRAZIL MOVES TOWARDS A SUSTAINABLE PATH 2000-2010 : A DECADE OF SOCIAL CHANGES • economic growth • reduction of inequality • market expansion

  7. BRAZIL: a New Growth Cycle • Sustainability • Income distribution • Social inclusion

  8. Decrease in Poverty Source: FGV/PNAD/IBGE.

  9. Reduction in Income InequalityGini coefficient Household income Source: PNAD/IBGE.

  10. Fundamentals for growth • Reduction of external vulnerability • Monetary stability • Fiscal responsibility

  11. Brazil Trade Surpluses(US$ billions) 160 159 137 Exports Imports 140 118 120 115 96 91 100 73 74 80 63 60 58 56 55 56 49 60 48 48 47 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007* * Up to September: Exports = 116 B Imports = 85 B 11

  12. (US$ billions) INTERNATIONAL RESERVES */ Position at 06/Sep/2007. Source: Central Bank of Brazil

  13. CURRENT ACCOUNT, FOREIGN DIRECT INVESTMENT AND EXTERNAL FINANCING REQUIREMENT(US$ billions, 12 months accum. basis) In the last 12 months up to October 2007 FDI reached a record of US$ 37.5 billions 13 9

  14. REDUCTION IN THE SOVEREIGN RISKbasis points Oct.2007: 161 points 14

  15. NOMINAL EXCHANGE RATE(R$/US$) 2.40 2.35 2.30 2.25 2.20 2.15 2.10 2.05 2.00 Oct.2007: 1 US$ = 1,80 R$ 1.95 1.90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07 07 15 11222222 1122222

  16. INFLATION: REDUCTION AND CONTROL 14 12.53 Consumer Price Index (IPCA): 12 Effectiveness, Expectations and Inflation Targeting (% Var. Accum. in 12 months) 9.30 10 8.94 7.67 7.60 8 5.97 5.69 6 3.9 3.8 3.14 4 3.02 2 0 1999 2000 2001 2002 2003 2004 2005 2006 2007* 2007** 2008** 16 16

  17. 44.5 38.9 31.8 30.7 28.0 PUBLIC SECTOR’s NET DEBT REDUCTION (% of GDP) 55 52.4 50.5 50 48.4 47.0 46.5 45.5 44.9 45 43.4 41.0 40 38.3 35.5 35 30 25 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 17

  18. RATINGS 18

  19. CAPITAL MARKET(US$ billions)) August 2007:: Over US$ 65 billions 60 Shares Debentures Other 50 40 30 20 10 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 19

  20. CAPITAL MARKET – IBOVESPA INDEX(points) Oct. 2007: Over 63.000 points 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 20

  21. A New Middle Class “A new middle class is emerging almost overnight in Brazil .  During 2000 and 2005, the number of families with annual income between US$ 5.900 and US$ 22.000 has grown 50%, from 14,5 million to 22,3 million, while the number of those who received less than US$ 3.000/year has been abruptly reduced to 1,3 million.” The Economist, edition of August18 – 24, 2007

  22. Trust in Brazil “Brazil is the clearest example of financial stability in Latin America” The Economist, edition of 25- 31, August 2007

  23. BRAZIL-NORWAY RELATIONS2007: a historical year • State Visit of President Lula • Visit of Foreign Minister Amorim • 14 governmental delegations • High level political & business contacts • Agreements between companies and business federations

  24. Brazilian Embassy and Brazilian-Norwegian Chamber of Commerce State Visit of President Lula Business Seminar, Sept. 14th, 2007 www.brazilchamber.no

  25. Brazil-Norway Business Cooperation A Memorandum of Understanding between NHO and CNI (Confederation of Brazilian Industries) was signed during President Lula´s State Visit.

  26. EMBRAER • One of the three main exporters in Brazil. Third largest yearly delivery of commercial aircraft (behind Boeing and Airbus). • Embraer has maintenance and commercial sites in the USA and commercial offices in France, Singapore and China. • Has a workforce of over 23,000 people.

  27. Year Exports Imports Total 2002 170.9 214.5 385.5 2003 280.4 265.5 545.9 2004 320.6 340.5 661.2 2005 444.2 295.2 739.4 2006 583,7 348,6 932,4 2007 (Sept.) 463,1 261,4 724,5 Trade Balance Brazil – Norway(US$ millions)

  28. Norway became in 2006 the main market for Brazilian Exports to the Nordic countries

  29. Norwegian Investment in Brazil

  30. PAC – Program for Accelerated Growth • In January the Government announced a new 4-year programme for economic growth • The “Programa de Aceleração do Crescimento” (PAC) is based on investments of US$ 236 billion in infrastructure • Priorities: roads, electricity, water, sanitation and housing. • Reduction of regional and social inequalities

  31. Key Areas for Business and Cooperation • Aircraft Production and avionics • medium-sized (50-110 passangers) jet planes • military training aircraft • Embraer is a global competitor in its category • Biofuels • Bioethanol and flex-fuel cars • 78.1% of sales of passenger cars in 2006 • Biodiesel • Scientific and technological cooperation in biofuels • MOU Statoil Petrobras

  32. Key Areas for Business and Cooperation • Shipbuilding (19 new and 23 future contracts: platforms, oil and gas transportation by Petrobras/Transpetro and general cargo) • Small and mid-size hydroelectric plants • Environmental technology (cleaner production, residue treatment) • Fisheries and aquaculture of native species • Tropical fruits (development of market and conditioning processes) • Tourism

  33. Norwegian companies doing business in Brazil • Over 120 Norwegian companies are doing business in Brazil • Oil sector: StatoilHydro • Mining: Norsk Hydro • Paper and pulp: Norske Skog • Maritime services: Det Norske Veritas • Shipbuilding: Aker Promar • Offshore: DOF,Sevan Marine, Norskan • Banking: DnB NOR, Nordea • Fertilizers: Yara • Telecommunications: Nera • Paints: Jotun

  34. ”During my visit to Brazil in 2003, Norwegian businessmen declared that Norwegian investments in Brazil would reach 5 billion US$ in the next 5 years. Today I can confirm that we are reaching this investment level” King Harald V(Sept 13, 2007)”I come to Norway convinced that the present moment opens up new and important opportunities. One of them results from a lasting cycle of sustainable growth in Brazil”President Luiz Inácio Lula da Silva(Sept 13, 2007)

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