Panel on Brazilian Economy

Transcription

1 Panel on Brazilian Economy International Consultative Council FUNDAÇÃO DOM CABRAL - FDC October 2012 Luciano Coutinho Luciano Coutinho President 1

2 Uncertainties in the International scenery: Developed world stagnated and Emerging growing up China Europe USA Emerging Political situation hinders adoption of strong measures to prevent slowdown in 2013 Fed s performance with QE3 is not enough in a scenery of fiscal cliff ; New facts how BCE s (OMT) policy to purchase securities, or the approval of rescue operations by Germany do not address structural questions; Long-term economic stagnation many news but nothing new Govermment s performance in a year of transition of leaderships should contribute for economy s acceleration in 2013 Uncertainties as to the rebalancing of growth: incresed participation in the consumption will probably come with a reduction in the rate of growth; In spite of the slowdown, China will continue growing in robust rates: between 6,5% and 8,5% for one or two more decades Recent progress of the other emerging countries and the investment opportunities in Asia and Africa will sustain growth at rates above the world average 2

3 USA: Labour market and fiscal perspective imposed need for further monetary stimulus measures Post recession employment recovery trajetories in the USA (100 = month before beginning of recession) After 56 months, employment level has not yet recovered its pre-crisis level FED has indicated that employment will havea higher weight on its decisions Unemployment over 6 months rate (% of unemployed) Unemployment over 6 month reaches 40% Political friction will continue to derail fiscal measures in the post-election Easing the cycle will be the responsibility solely of monetary policy Source: Bloomberg. Elaboration APE/BNDES 3

4 Chinese slowdown is linked not only to the exports fall to the European Union... Exports and imports growth in China (var. % m/m-12)) Imports in China will have a downturn in aug/12 Growth in the Chinese exports: European Union and other destinies (var. % m/m-12)) Exports are being impacted by the downturn in sales to European Union (fall of12,7% in aug/12) Source: Bloomberg. Elaboration APE/BNDES 4

5 ...but also to investment adjustment (especially real estate) Investment growth in China (var. % a.a.) (*) data till aug/12)) Sectorial participation of investments (in % aug/12)) Real State sector represents about 25% of investment in China Investment slowdown (leaded by the real estate) is being partially compensated by the rise of investments in infrastructure Infrastructure package presented by the Chinese government in the amount of US$ 150 billions Source: Bloomberg. Elaboration APE/BNDES 5

6 Despite the slowdown, emerging countries will continue to increase their participation in the world economy Emerging countries advance in the process of catching-up with advanced economies; Between 2003 and 2008, the emerging countries average growth was 7,4% per year; In the post-crisis, the projected increase is around 6% Economic Growth Emerging X Developed (% per year) Descolamento dos Emergentes Crescimento pós-crise Source: FMI Economias Avançadas Economias Emergentes 6

7 In the long term, the Brazilian economy will reach sustainable growth Growth is sustainable Social inclusion drives the domestic market; A robust banking sector, with no exposure to problematic assets; Government is capable of providing answers: fiscal and monetary instruments; financial and regulatory instruments. Relevant investment opportunities : Oil & Gas, Infrastructure, Logistics, Energy, PAC 2, Competitive Sectors, 2014 World Cup, 2016 Olympic Games

8 In the long term, the Brazilian economy will reach sustainable growth Significant reduction in the SELIC rate; Exchange rate less appreciated; Sustainable growth Reducing electric energy costs; Relief of employers contributions on payroll; New frontier of concessions to the private sector in logistics (highways, railways, harbors, airports). 8

9 Better income distribution boosted the domestic market BRAZIL Economic classes (millions of persons) 22,5 13,3 8,8 12,9 65,9 45,6 105,5 55,4 Classes A e B 55% da população Classe C ,9 96,2 83,3 63,6 Classes D e E 0 Source: Department of the Treasury and FGV

10 increasing the access to goods in the regions of the country Northern and Northeast regions leaded the process Volume of retail sales by region 2002=100 and variation % accumulated in the period ,2% 99,1% 81,2% 76,6% 75,5% 56,8% Source: IBGE Brasil Norte Nordeste Sudeste Sul Centro-Oeste 10

11 Domestic demand will continue to lead the Brazilian economy growth GDP Domestic absorption and net exports (var. % annual and contribution in p.p.) ,2 0,6 2,6 6,1 5,2 4,0 7,1 6,6 4,7-0,8-1,0-1,5 10,3 0,0-0,3-2,7-0,3 7,5 2,7 Net Exports Domestic Demand GDP 1,9 3,4 2,3-0,7-0,4-4 Source: IBGE * *accumulated in the last 4 quarters till the 2nd quarter/

12 Unemployment rate is falling Unemployment in structural fall Source: IBGE. 12

13 Real income growth supports total wages expansion -0,4 2,1 3,5 3,8 4,3 4,3 3,5 3,2 3,2 3,5 3,9 3,7 2,9 2,2 2,4 2,4 2,3 2,5 2,3 2,1 2,2 jan/10 0,9 1,5 2,3 2,5 3,4 5,1 5,5 fev/10 mar/10 abr/10 mai/10 jun/10 jul/10 ago/10 7,4 7,7 6,9 7,1 6,5 4,8 5,0 3,0 set/10 out/10 nov/10 dez/10 jan/11 fev/11 mar/11 abr/11 5,1 5,1 5,2 4,3 mai/11 jun/11 jul/11 ago/11 0,0 1,7 1,5 1,9 1,3 2,0 1,9 1,6 1,8 2,5 2,0 1,4 1,5 set/11-0,3 out/11 0,7 2,6 2,7 nov/11 dez/11 jan/12 4,4 5,6 6,2 4,9 4,7 fev/12 mar/12 abr/12 mai/12 jun/12 0,9 2,3 jul/12 ago/12 Growth rates and Decomposition of the actual total wages (var. % m/m-12) ,7 8,4 6,7 6,9 4,4 5,3 11,2 11,9 10,8 8,8 7,3 5,3 7,8 7,4 6,6 3,9 4,8 2,6 1,2 6,4 7,38,1 6,8 3,8 2,3 0-2 Average Real Income Labour Force Total Payroll Source: IBGE. 13

14 Investments of the Union: greatest acceleration in 6 years jan/10 abr/10 jul/10 out/10 jan/11 abr/11 jul/11 out/11 jan/12 abr/12 jul/12 Retraction in the investments of the Central government at the end of 2011 was more than offset by the acceleration of investments in 2012 Expenses with PAC (% of the GDP accumulated in 12 months) 0,85% 0,80% 0,75% 0,70% 0,65% 0,60% 0,55% 0,50% Despesas Federais com PAC - acumulada em 12 meses - em % do PIB 0,57% 0,63% Source: National Treasury 0,61% 0,66% 0,63% 0,60% 0,59% 0,66% 0,68% 0,61% 0,80% 0,78% Primary Expenses of the National Treasure (var.actual % face to the previous period and contribution in p.p.) 10,0% 2,0 3,8 4,1% 0,4 2,8 2,7 10,6% 2,0 4,5 1,6 1,7 1,4-0,8 1,8 2,7 3,7 2,2 3,2 2,8% 1,3 1,8 0,3-0,7 Public Investments represent 15% of the FBKF (more than 50% concentrates in the States and municipal districts according to IPEA) 5,8% 1,8 4,9-0,9 0, (jan a jul) Outras Despesas de Capital Outras Despesas de Custeio 10,9% Pessoal e Encargos Sociais Transferências 14

15 Anti-cyclic policies are being adopted to stimulate investments Cycle of monetary easing of 500 basis points over the past 12 months (in SELIC lows) TJLP reduction Tax cuts PAC Equipments + PAC urban mobility Investment Program in Logistics: Highways, Railways, Harbors and Airports Public investment acceleration (PAC and Minha Casa Minha Vida) Financing States New (recent) measures of investment support PSI (2,5% rate for trucks, pro-caminhoneiro, buses and capital goods till dec/12) Accelerated depreciation for trucks and wagons (from 48 to 12 months till dec/12) Extension of the IPI reduction for capital goods (till dec/13) 15

16 Macroeconomis stability: Real Interest rate in structural fall And low international interet rates Real interest rates (SELIC accumulated in the month annualized - % per year) * Source: Brazilian Central Bank and IBGE (*)Accumulated in 12 years till aug/12 16

17 mar/03 jun/03 set/03 dez/03 mar/04 jun/04 set/04 dez/04 mar/05 jun/05 set/05 dez/05 mar/06 jun/06 set/06 dez/06 mar/07 jun/07 set/07 dez/07 mar/08 jun/08 set/08 dez/08 mar/09 jun/09 set/09 dez/09 mar/10 jun/10 set/10 dez/10 mar/11 jun/11 set/11 dez/11 mar/12 jun/12 Fiscal Policy: There is space for action without compromising downward trend in net debt Gross Debt and Net Debt (% of GDP) ,9 Reduction of requirement reserves during the crisis 56,4 47,3 59,7 55,9 63,1 53,4 Gross Debt/GDP 57, Net Debt/GDP 37,8 BRL Depreciation 42,9 34,9 30 Source: Brazilian Central Bank 17

18 Despite the good moment of Brazilian economy, some challenges need to be overcome Long-term challenges Generate ongoing opportunities for social mobility and eradicating poverty; Raise domestic savings rates; Diversify long-term financing sources; Promote innovation and sustainability; Firm and growing investment in infrastructure; Qualification of the workforce to sustain significant productivity gains; Improve the Brazilian industry competitiveness. 18

19 Investment in infrastructure has grown every year In 2012, investments in infrastructure are expected to reach US$ 104 billion (US$ 98,2 billion at 2011 prices). Real growth of 6%. 33,8 2,4 2,5 10,9 8,0 3,4 4,8 7,1 6,8 US$ bn, at 2011 prices 37,9 45,2 2,5 10,7 7,4 8,0 48,2 3,2 8,7 8,5 9,7 12,8 13,0 16,6 18,2 57,4 2,8 9,3 9,3 10,6 25,3 70,1 3,5 11,9 11,4 10,6 32,7 80,1 4,7 10,9 13,0 14,7 36,7 90,9 92,6 4,7 4,2 10,3 11,7 16,4 16,4 17,8 21,1 41,8 39,2 98,2 Basic Sanitation Telecommunications Transport Electric Energy Oil & Gas * Source: ABDIB and the Ministry of Finance. *ABDIB projection 19 19

20 BNDES disbursements for infrastructure remain high BNDES Disbursements and Approvals for Infrastructure (in US$ billion) Disbursement Approvals * Source: BNDES. *projected disbursements for Infrastructure in

21 Challenge: advance in internal financing sources Foreign Direct Investment has been an important source of funding (*) accumulated data for 12 months Source: IBGE and BCB. Elaborated by: APE/BNDES 21 21

22 It is necessary to encourage the capitals market to finance infrastructure Fiscal incentives for initial offerings and secondary market in private securities (improvement of Law 12,431) Tax advantages for investors in infrastructure debentures issued by SPE; No more need for bank reserves at Central Bank for more recent long-term securities ( Financial Notes ); Liquidity Fund for long-term private securities. The BNDES is engaged in this effort: Acquisition of debentures in initial offerings and operations on the secondary market; Complementary participation in the Liquidity Fund for Private Securities (proposal under analysis at the BNDES); BNDES will also lend securities in its portfolio to financial institutions in the role of market-makers (proposal under analysis at the BNDES); Changes in its operating policies

23 Taking measures will increase the participation of corporate debt in investment funding Pattern of financing for Investments in Industry and Infrastructure in Brazil ( ) Forecast Source: Estimate offered by APE/BNDES based on date from AMBIMA, CVM and Economática 23 23

24 The Great Opportunities in Brazil Dynamic Domestic Market Clean Energy Advantages and Virtues of the Brazilian Economy Democracy and Institutional Development Pre-Salt Potential competitive of industry and sectors Agribusiness/Mining 24

25 Panel on Brazilian Economy International Consultative Council FUNDAÇÃO DOM CABRAL - FDC October 2012 Luciano Coutinho Luciano Coutinho President 25