Brazil s economic growth and use of the BNDES financing for strategic infrastructure projects. Tokyo June 21, Luciano Coutinho President

Transcription

1 Brazil s economic growth and use of the BNDES financing for strategic infrastructure projects Tokyo June 21, 2011 Luciano Coutinho President

2 Brazil begins a new development cycle The Brazilian economy will continue to grow strong over the coming years, which will bring about great investment opportunities; The domestic market will make the growth in demand feasible: basic household consumption, housing and durable goods; Investment will be driven by five main sectors: Oil & Gas, Electric Energy, Logistics, Residential Construction and Agribusiness; Main challenges: i) to increase the aggregate GDP/investment rate, and ii) to make the competitive advance of the manufacturing industry feasible. 2

3 Brazil resumes growth at expressive rates, above the world average Brazil: GDP Growth Rates ( % ) Average: 3.6% PAC 1 PAC Average: 1.7% Average: 5.6% * 2012* 2013* 2014* -0.2 Source: Ministry of Finance 3

4 Domestic market is an engine for Brazilian growth Breakdown of GDP Growth (% p.a.) Internal Demand Net Foreign Demand Aggregate Demand * Source: IBGE Elaborated by: Ministry of Finance *Estimates: Ministry of Finance. 4

5 ...thanks to reduced unemployment, Unemployment Rate (%) Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Source: IBGE. 5

6 ... the expanding payroll, Monthly payroll Average for last 12 months (US$ bn) Source: IBGE. US$/R$ =

7 ... growth in credit, Credit: Index (basis Jan.07=100) Housing Individuals Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Source: Central Bank. 7

8 ... and improved distribution of income. Over the last decade, there has been a relevant drop in social inequalities... Accumulated variation between 2001 and % wealthiest 20% poorest 49,52% 55,59% 8,88% 8,12% Income Years of Schooling (employed) Source: Inequality in Income over the Decade, FGV/CPS,

9 ... and regional disparity. Accumulated Variation between 2001 and 2009 Southeast Northeast 29,49% 30,68% 15,67% 8,60% Income Years of Schooling (employed) Source: Inequalities in Income over the Decade, FGV/CPS,

10 Investment maintains a strong upward path of growth Forecast for Rate of Investment (% of GDP) 26% 24% 22% 20% 18.7 % 19.2 % 18.4 % 18% Fore c a st % % % 16% 14% 12% 14.7 % 15.3 % 17.3 % 16.8 % 10% Source: IBGE and APE/BNDES. 10

11 Investment perspectives: positive expectations Infrastructure projects are important stimulus instruments and guarantee public as well as private investment so as to achieve inclusive and integrated development. Sectors US$ billion Growth % % year Industry Oil & Gas Mining Steel Petrochemical Vehicles Electronics Pulp & Paper Textile and Apparel Infrastructure Electric Power Telecoms Sanitation Railroads Roads Ports Buildings TOTAL Source: BNDES US$/R$ = 1.75 Oil & Gas and the Domestic Market lead investments in Industry Electric Power leads investments in Infrastructure Investments in sanitation and logistics will grow at expressive rates 11

12 Positive results 4 years after PAC 1 was created Increase in GC participation in the GDP from 16.4 % in 2006 to 18.4% in GDP grew 7.5% in A record net number of jobs generated: 5.6 million registered jobs were created in the country. Excellent results from the My House, My Life program. More than 463,000 units were contracted, at US$ billion. Public sector investments over US$ billion, while the private sector was approximately US$ 73.1 billion. US$/R$ =

13 Challenges for the infrastructure sector Growth Acceleration Program 2 (PAC 2) in US$ billion Investments PAC 1 PAC 2 Area pós-2010 Total Energy 168,6 622,0 790,6 Logistics 54,9 62,3 117,1 Social and Urban 145,7 222,2 367,9 Federal Government's forcast 369,1 906, ,7 Subways, Urbanization, Housing and Sanitation Source: Federal Gov t website. Highways, Railways, Ports, Airports, Merchant Navy and Waterways Generation, Transmission and Oil & Gas US$/R$ =

14 The BNDES s portfolio of investments Position at Amounts in US$ billion Energy US$ billion Renewable Fuel Transmission Oil & Gas Generation Logistics US$ 15.1 billion Social and Urban US$ 5.03 billion Railways Highways Merchant Navy Urbanization Subways Sanitation US$/R$ =

15 The BNDES Annual Disbursements to the PAC (forecast) Amounts in US$ billion 2011 Energy Social and Urban Logistics Public Administration % BNDES Total up to March 11 R$ 87.2 billion % BNDES % BNDES % BNDES % BNDES Includes Petrobras R$ 25 billion operation % BNDES * Amounts prior to 2006 correspond to projects that already existed in the Bank s portfolio, prior to the creation of the PAC in

16 Infrastructure projects that stand apart in Forecast investment amounts Hydroelectric plant on Madeira River US$ 13.4 billion Angra III hydroelectric plant US$ 6 billion Belo Monte hydroelectric plant US$ 14.9 billion Tapajós hydroelectric plant US$ 14.3 billion Wind energy projects US$ 4.6 billion TAV (High-Speed Train) US$ billion US$/R$ =

17 Challenges for the infrastructure sector Investments in hotel infrastructure, ICT and stadiums According to the Ministry of Sports, potential economic impacts from the World Cup may reach US$ billion, of which US$ 27.1 bn (26%) is expected to be direct, while US$ 77.6 bn (74%), indirect: Investments in hotel services: US$ 1.14 billion; Investments in ICT: US$ 11.4 billion to US$ 17.1 billion in expanding broadband services; New stadiums and remodeling of existing areanas will require investments of approximately US$ 3.6 billion. Investments required to hold the 2016 Olympic Games are estimated at US$ 7.2 billion. This amount, however, will be reviewed this year. Investments include: Clean up of the Guanabara Bay; Accommodation and sporting facilities; Security; Technology and transport. US$/R$ = 1,75 17

18 Challenges for the infrastructure sector Investments in Urban Transport Urban transport in the PAC includes 51 projects in the World Cup host cities: RBT (Rapid Bus Transit); VLT (Light rail vehicles); Expanding the subways; Other transport works. Urban Transport Projects in PAC (US$ million)* Belo Horizonte 870 Brasília 208 Cuiabá 275 Curitiba 255 Fortaleza 321 Manaus 878 Natal 235 Porto Alegre 300 Recife 407 Rio de Janeiro 920 Salvador 324 São Paulo 1,814 TOTAL 6,807 Source: Transparency Portal US$/R$ =

19 BNDES Approvals for infrastructure increased 20% over the last 12 months The BNDES Disbursements and Approvals for Infrastructure Data accumulated over the last 12 months up to April 2011 (US$ bn) Disbursements 33.8 Approvals * Source: BNDES. US$/R$ =

20 Capital markets and banking systems must share longterm financing 2,3 9,1 9,4 4,8 12,2 Pattern of Company Financing (%) 2,7 3,9 4,3 5,9 8,1 14,3 13,2 9,9 11,1 13 9,7 12,2 13,3 7,8 5,4 2,3 23,2 22, ,5 16,2 8,3 5 11,1 14,5 62,3 53,5 48,7 53,9 40,4 36, * Own resources (savings and retained earnings) Fundraising on the international market Capital Market Source: Capital Markets Study Center. *Does not include Petrobras share issuance. Direct foreign investment BNDES disbursements (Finem and Finame) Housing (support for production FGTS and SBPE) 20

21 New measures to encourage long-term credit for infrastructure Tax incentives for primary issuance of and transactions with long-term private securities; The BNDES is coordinating several measures: Acquisition of debentures in primary issuance offers; Complementary participation in the Liquidity Fund for Private Securities; Issuance of Financial Bills; The BNDES will lend the securities in its portfolio to private institutional wishing to play the role of market-makers, aiming to create a secondary market; Elaborating and disseminating appropriate indexes for long-term financing; Technical cooperation accord with BM&F Bovespa. 21

22 Brazil s long-term challenges To resume and qualify long-term planning (energy, logistics, environment, IT infrastructure,...); To promote and stimulate domestic savings in order to provide long-term funds for investment (banks and capitals market); To increase opportunities for social mobility (job expansion, development/improvement in education) and reduction of inequalities in income distribution, both personal and regional; To develop capacity for innovation and competitiveness in the manufacturing industry, and promote global presence of Brazilian companies (vs. significant challenges stemming from exchange rate appreciation); To promote innovation and development, aiming at social and environmental sustainability. 22

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