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Brazil – NorwayBrazil – Norway
Outlook of the Brazilian Outlook of the Brazilian EconomyEconomy
Ambassador Sérgio Eduardo Moreira Lima
MIB Forum, NHH, Bergen, 24 October 2007
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50% of South America’s territory 50% of South America’s territory (70% of MERCOSUL) 8.5 million Km(70% of MERCOSUL) 8.5 million Km22
50% of South America’s 50% of South America’s population population (71.3 % of (71.3 % of MERCOSUL) 190 million peopleMERCOSUL) 190 million people
50% of South America’s GDP50% of South America’s GDPUS$ 1.1 trillion (2006)US$ 1.1 trillion (2006)
SurinameVenezuelaFrench Guyana
Guyana
Colombia
Ecuador
PeruBolivia
Chile
Brazil
Uruguay
Paraguay
Argentina
LOCATIONLOCATION
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World Largest EconomiesWorld Largest Economies GDP (real exchange rates) - US$ BillionGDP (real exchange rates) - US$ Billion
1. USA 13.001.0002. Japan 4.340.0003. Germany 2.906.0004. China 2.668.0005. U.K. 2.345.0006. France 2.230.0007. Italy 1.844.0008. Canada 1.251.0009. Brazil 1.068.000
Sources: Bloomberg / IMF / International Herald Tribune (Oct.15th 2007)
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POLITICAL
The 80s was a decade of
consolidation of democracy.
AS BRAZIL OVERCOMES ITS AS BRAZIL OVERCOMES ITS CHALLENGESCHALLENGES
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…….BUSINESS OPPORTUNITIES .BUSINESS OPPORTUNITIES KEEP OPENING UP.KEEP OPENING UP.
ECONOMIC
The 90s was marked by overcoming
inflation and bringing currency stability.
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BRAZIL MOVES TOWARDS A BRAZIL MOVES TOWARDS A SUSTAINABLE PATHSUSTAINABLE PATH
2000-2010 : A DECADE OF SOCIAL CHANGES
economic growth
reduction of inequality
market expansion
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BRAZIL: a New Growth CycleBRAZIL: a New Growth Cycle
Sustainability
Income distribution
Social inclusion
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Decrease in PovertyDecrease in Poverty
28,8 29,028,5
27,2
28,4
27,628,2
22,8
26,7
25,4
21
22
23
24
25
26
27
28
29
30
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
% population
Source: FGV/PNAD/IBGE.
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Reduction in Income InequalityReduction in Income InequalityGini coefficient Household incomeGini coefficient Household income
Source: PNAD/IBGE.
0,528
0,532
0,535
0,545
0,553
0,558
0,560
0,567
0,570
0,5680,567
0,525
0,530
0,535
0,540
0,545
0,550
0,555
0,560
0,565
0,570
0,575
1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006
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Fundamentals for growthFundamentals for growth
Reduction of external vulnerability
Monetary stability
Fiscal responsibility
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Brazil Trade SurplusesBrazil Trade Surpluses(US$ billions)(US$ billions)
4855 58 60
73
96
118
137
4956 56
47 4863
74
91
159
115
0
20
40
60
80
100
120
140
16019
99
2000
2001
2002
2003
2004
2005
2006
2007
*
Exports Imports
* Up to September: Exports = 116 B Imports = 85 B
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INTERNATIONAL RESERVES
*/ Position at 06/Sep/2007.Source: Central Bank of Brazil
mar/0659,8
set/07*162,6
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
sep03
des03
mar04
jun04
sep04
des04
mar05
jun05
sep05
des05
mar06
jun06
sep06
des06
mar07
jun07
sep07
Increase: 102,8 billions
Liquidation of Foreign Debt to IMF
(US$ billions)(US$ billions)
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CURRENT ACCOUNT, FOREIGN DIRECT INVESTMENT AND EXTERNAL FINANCING
REQUIREMENT (US$ billions, 12 months accum. basis)
-34.4
14.1
20.2
-40
-20
0
20
40
ago98
fev99
ago99
fev00
ago00
fev01
ago01
fev02
ago02
fev03
ago03
fev04
ago04
fev05
ago05
fev06
ago06
fev07
External Financing Requirement Current Account Foreign Direct Investment
9 13 In the last 12 months up to October 2007 FDI reached a record of US$ 37.5 billions
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REDUCTION IN THE SOVEREIGN REDUCTION IN THE SOVEREIGN RISKRISK
basis pointsbasis points
0
500
1,000
1,500
2,000
2,500
Jan02
Apr02
Jul02
Oct02
Jan03
Apr03
Jul03
Oct03
Jan04
Apr04
Jul04
Oct04
Jan05
Apr05
Jul05
Oct05
Jan06
Apr06
Jul06
Oct06
Jan07
Apr07
EMBI+ Brazil
EMBI+ excluding Brazil and Argentina
Oct.2007:
161 points
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NOMINAL EXCHANGE RATENOMINAL EXCHANGE RATE(R$/US$)(R$/US$)
1.90
1.95
2.00
2.05
2.10
2.15
2.20
2.25
2.30
2.35
2.40
Jan06
Feb06
Mar06
Apr06
May06
Jun06
Jul06
Aug06
Sep06
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
Oct.2007:
1 US$ = 1,80 R$
11222221122222215
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INFLATION: REDUCTION AND INFLATION: REDUCTION AND CONTROLCONTROL
Consumer Price Index (IPCA): Effectiveness, Expectations and Inflation Targeting
(% Var. Accum. in 12 months)
8.94
5.97
7.67
12.53
9.30
7.60
5.69
3.14 3.02 3.9 3.8
0
2
4
6
8
10
12
14
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7*
200
7**
200
8**
1616
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PUBLIC SECTOR’PUBLIC SECTOR’ss NET DEBT REDUCTION NET DEBT REDUCTION (% of GDP)(% of GDP)
28.0
30.731.8
38.9
44.545.5
48.450.5
52.4
47.0 46.544.9
43.4
41.0
38.3
35.5
20
25
30
35
40
45
50
55
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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RATINGS
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Moddy´s S&P Fitch
B1 B+
Ba3 BB-
B2 B
M S&P; F
Ba2 BB
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CAPITAL MARKET (US$ billions)(US$ billions) )
0
10
20
30
40
50
60
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Shares Debentures Other
August 2007::
Over US$ 65 billions
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CAPITAL MARKET – IBOVESPA INDEXCAPITAL MARKET – IBOVESPA INDEX(points)(points)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Jan03
Apr03
Jul03
Oct03
Jan04
Apr04
Jul04
Oct04
Jan05
Apr05
Jul05
Oct05
Jan06
Apr06
Jul06
Oct06
Jan07
Apr07
Oct. 2007:
Over 63.000 points
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“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 August 18 – 24, 2007
A New Middle Class
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“Brazil is the clearest example of financial
stability in Latin America”
The Economist, edition of 25- 31, August 2007
Trust in Brazil
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BRAZIL-NORWAY RELATIONSBRAZIL-NORWAY RELATIONS 2007: a historical year2007: a historical year
State Visit of President LulaVisit of Foreign Minister Amorim14 governmental delegations High level political & business contactsAgreements between companies and
business federations
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Brazilian Embassy and Brazilian Embassy and Brazilian-Norwegian Chamber of CommerceBrazilian-Norwegian Chamber of Commerce
State Visit of President Lula Business Seminar, Sept. 14th, 2007
www.brazilchamber.no
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Brazil-Norway Business CooperationBrazil-Norway Business Cooperation
A Memorandum of Understanding between
NHO and CNI (Confederation of Brazilian
Industries) was signed during President Lula´s
State Visit.
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EMBRAEREMBRAER
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.
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Trade Balance Brazil – NorwayTrade Balance Brazil – Norway (US$ millions)(US$ millions)
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
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Norway became in 2006 the main Norway became in 2006 the main market for Brazilian Exports to the market for Brazilian Exports to the
Nordic countriesNordic countriesBrazilian Exports in 2006 - USD Millions
584
496458
219
Norway Sweden Finland Denmark
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Norwegian Investment in BrazilNorwegian Investment in Brazil
Scandinavian FDI to Brazil
8360 54
26 43
339
0
50
100
150
200
250
300
350
400
2001 2002 2003 2004 2005 2006
US
$ m
n
Norway
Sweden
Finland
Denmark
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PAC – Program for Accelerated GrowthPAC – 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
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Key Areas for Business and CooperationKey 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 cars78.1% of sales of passenger cars in 2006
• Biodiesel• Scientific and technological cooperation in biofuels
MOU Statoil Petrobras
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Key Areas for Business and Key Areas for Business and CooperationCooperation
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
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Norwegian companies doing business in BrazilNorwegian 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
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””During my visit to Brazil in 2003, Norwegian During my visit to Brazil in 2003, Norwegian businessmen declared that Norwegian investments in businessmen declared that Norwegian investments in Brazil would reach 5 billion US$ in the next 5 years. Brazil would reach 5 billion US$ in the next 5 years.
Today I can confirm that we are reaching this investment Today I can confirm that we are reaching this investment level”level”
King Harald V King Harald V (Sept 13, 2007)(Sept 13, 2007)
”I come to Norway convinced that the present moment ”I come to Norway convinced that the present moment opens up new and important opportunities. One of them opens up new and important opportunities. One of them
results from a lasting cycle of sustainable growth in results from a lasting cycle of sustainable growth in Brazil”Brazil”
President Luiz Inácio Lula da SilvaPresident Luiz Inácio Lula da Silva
((Sept 13, 2007)Sept 13, 2007)
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