THE RECOVERY OF THE BRAZILIAN ECONOMY WALTER BAÈRE FILHO

Transcription

1 THE RECOVERY OF THE BRAZILIAN ECONOMY WALTER BAÈRE FILHO Deputy Executive Secretary of Planning, Development and Management

2 THE ECONOMY REFLECTS THE ADJUSTED POLICIES BOOMING CAPITAL MARKET 85,032 pts STOCK EXCHANGE AT RECORD HIGHS AVERAGE INDEX OF APRIL 2018 STRONG BALANCE OF PAYMENTS ECONOMIC RECOVERY LOW INFLATION 2.95% LOWER ANNUAL INFLATION RATE SINCE 1998 CONSUMER PRICE INDEX (IPCA) FOR 2017 LOW INTEREST RATE US$ 64.4 billion TRADE BALANCE RECORD HIGH IN 2017 US$ 383 billion STABLE RESERVES FOR THE PAST 6 YEARS 6.50% LOWEST INTEREST RATE IN HISTORY COPOM BASE RATE IN MAY 2018

3 III IV I II III IV I II III IV I II III IV I II THE END OF THE ECONOMIC RECESSION Gross Domestic Product (% change in 4Q ver the previous period) 1.0% 1.4% 1.8% 2.2% 2.5% 2.8% 3.0% -1.2% -0.2% -2.2% -3.5% -4.4% -4.6% -4.2% -3.5% -2.2% Market Projections Source: IBGE and BCB/FOCUS of May 18, 2018

4 THE LABOR MARKET RECOVERS Net Job Creation/Destruction (YTD) Number of People 2,629,827 2,026,571 1,372,594 1,138, , ,855-18,395-1,534,989-1,326,558 Source: CAGED/MTE (JAN - APR) 4

5 BRAZIL ADOPTED A SUCCESSFUL INFLATION TARGET REGIME IPCA (acum. 12m) Meta de Inflação Limite para efeito de cumprimento da meta Source: IBGE and BCB : BCB/Focus of of May. 18, 2018

6 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 REAL INTEREST RATES ARE FALLING Real interest rate ex-ante* (%) 10.0% 9.0% 8.6% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 1.4% 2.3% 0.0% Source: Brazilian Central Bank - BCB * Swap DI-Pre of 360 days over expected IPCA inflation in 12 months

7 Bovespa Index THE STOCK EXCHANGE IS AT RECORD HIGHS May 17, 2018 January 26, 2016 Change % Ibovespa 83,622 37, % Petrobras (PETR3) % Vale do Rio Doce (VALE3) % Banco do Brasil (BBAS3) % Eletrobras (ELET3) % Closing prices as of Mar. 17, Source: Bloomberg

8 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 TRADE BALANCE AT RECORD HIGH Trade Balance Accumulated in 1 year US$ mm. FOB 80,000 70,000 60,000 50,000 40,000 30,000 Trade Balance Exports Imports Exports and Imports Daily average accumulated in 1 year US$ mm. FOB 64, , , ,000 0 Source: MDIC

9 EXTERNAL FINANCIAL NEEDS COVERED BY FOREIGN INVESTMENTS % of GDP 3.4% 3.6% 2.8% 3.3% 3.3% 2.9% 3.1% 2.2% 2.2% 2.7% -1.6% -3.4% -2.9% -3.0% -3.0% -4.2% -3.3% -1.3% -0.5% -0.4% * Current Account Result Direct Investment in the Country Source: BCB *2018: 12-mo accumulated until March

10 STABLE INTERNATIONAL RESERVES FOR THE PAST 6 YEARS 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 set-12 dez-12 mar-13 jun-13 set-13 dez-13 mar-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 mar-16 jun-16 set-16 dez-16 mar-17 jun-17 set-17 dez-17 mar

11 ECONOMIC RECOVERY Fiscal Consolidation Structural Reforms ECONOMIC GROWTH Public-Private Partnership Improvement of the regulatory framework and business environment

12 FISCAL CONSOLIDATION New Fiscal Regime: Constitutional Amendment 95/2016 of the Public Expenditure Cap. Modernization of Public Management: improvement of electronic systems and processes, strengthening and expanding Digital Government practices. Modernization of State Enterprises Management: Strict rules for purchases, bids and for the appointment of managerial positions and reduction in the effective staff of non-dependent state companies. 12

13 % GDP EXPENDITURES ARE EXPECTED TO DECLINE Total Primary Expenditure 21.0% 20.0% 19.4% 20.0% 19.5% 19.7% 19.0% 18.8% 18.0% Average : 17,4%. 17.4% 18.2% 17.3% 18.1% 18.3% 17.8% 17.0% 16.0% 15.9% 15.6% 16.4% 16.8% 16.9% 16.2% 16.8% 16.9% 15.1% 15.0% 14.0% * 2019** 2020** 2021** Source: until 2017, National Treasury. * 2018: Evaluation Report for the 2 nd bimester of ** , PLDO

14 THE FISCAL CHALLENGE Fiscal recovery of States Federal Government posts primary deficits since 2014: Fiscal challenges involve both expenditures and revenues. The fiscal crisis promotes the search for efficiency of public expenditures. At the same time, the Federal Government implements an agenda of modernization of public management. Better public services are related to the revision of public expenditures and to the improvement in revenues. 14

15 PRIMARY EXPENDITURES IN 2017 Personnel expenses and social costs (working servants) 12.6% Other Expenditures 11.9% Old Age and Survivor Benefits 53.2% Social Assistance 11.2% Health care (exc.personnel) 7.5% Education (exc. personnel) 3.6% Source: National Treasury 15

16 % GDP PIB A REFORM OF THE SOCIAL SECURITY SYSTEM IS NEEDED Resultado (RGPS) Receita Revenues Líquida RGPS Despesa Net Expenditures Revenues Líquida RGPS 10.0% 8.0% 6.4% 6.7% 6.6% 6.4% 6.6% 6.7% 6.8% 7.3% 8.1% 8.5% 8.5% 8.4% 8.6% 8.8% 6.0% 4.0% 5.3% 5.5% 5.5% 5.6% 5.7% 5.8% 5.8% 5.8% 5.7% 5.7% 5.6% 5.7% 5.7% 5.7% 2.0% 0.0% -2.0% -4.0% -0.8% -1.2% -1.3% -1.1% -0.8% -0.9% -1.0% -1.4% -2.4% -2.8% -2,9% -2.8% -2.9% -3.1% * 2019** 2020** 2021** Source: until 2017, National Treasury. * 2018: Evaluation Report for the 2 nd bimester of ** , PLDO

17 THE AGE PATTERN IS CHANGING People over 60 y.o. were 6.3% of the population in 1990 Homens Men Age Pyramid 1990 / 2010 / 2030 / 2060 Mulheres Women Thousand Milhares people 1990 > Men Homens Women Mulheres Thousand people Milhares 2010 > In 2010, they reached 10.0% of the population In 2030, they will be 18.6% of the population Homens Men 2030 Women Mulheres In 2050, the share of elderly > 80 people Brazil is expected to reach 29.4% of the population (or mm people) Homens > 80 Mulheres Homens > 80 Mulheres > Thousand Milhares people Thousand Milhares people Milhares Milhares Men Homens 2050 Women Mulheres Source: IBGE.

18 % PIB % GDP GENERAL GOVERNMENT GROSS DEBT 90.0% 80.0% 70.0% 65.5% 70.0% 74.0% 75.7% 77.7% 79.7% 81.1% 60.0% 50.0% 56.0% 59.2% 51.8% 51.3% 53.7% 51.5% 56.3% 40.0% 30.0% 20.0% 10.0% 0.0% Sources: BCB and National Treasury. *PLDO

19 PPI - INVESTMENTS, CONCESSIONS AND PRIVATIZATIONS 74 Projects Auctioned or Renewed US$ 10.6 billion* in signature bonuses US$ 42.1 billion* In expected investments Electric Power Airports * R$ 36 billion and ** R$ billion (Exchange rate of BRL per USD, Apr monthly average) +Liquefied Petroleum Gas 46 Transmission Lots Aug. and Dec Concessions of Hydroelectric Plants: São Simão, Jaguara, Miranda e Volta Grande Sep Extension for the Small Hydroelectric Plant of Pery/SC Jul Privatization of CELG-D Feb Florianópolis, Fortaleza, Porto Alegre e Salvador Jul Oil and gas Port Terminals 4 th Marginal Fields Round May th and 15 th Exploratory Blocks Bidding Round Sept and Mar nd and 3 rd Pre-Salt Production Sharing Bidding Rounds Oct Salvador-Tecon and Paranaguá-Fospar Nov STM 04 e 05 Santarém Mar Santa Catarina Tesc Jul Wheat Terminal RJ and Itaqui/MA - Tequimar Aug Vila do Conde/PA Convicon, Nitport and Nitshore RJ Nov LPG + Terminals - Miramar/PA Apr. 2018

20 ONGOING PROJECTS 101 PPI Projects US$ 39.4 billion* in expected investments Highways Railways Biddings 5 Renewals 4 Studies Airports Concessions 4 Shareholding selling 3 Biddings Port Terminals 25 Electric Power 32 UHE - 1 Extension Privatization 6 Distributors and Eletrobras Concession 24 Transmission Lots COMAER 1 Public-Private Partnership (PPP) Oil and gas 2 1 Pre-salt sharing 1 Marginal accumulation Lottery 1 Concession of the right to exploit Currency House 1 Privatization Mining 4 Concession to exploitation of Mining areas Supply 2 CEASAMINAS CASEMG Privatization *R$ billion (Exchange rate of BRL per USD, Apr monthly average) 20

21 PRIORITY AGENDA Tax simplification: Social Contribution Reform Central Bank autonomy New legal framework for tenders and public procurements New public finance law Regulation on civil servants salaries Business improvement and recovery program of state-owned companies New real estate purchase contracts law Update of the General Telecommunications Law Privatization of Eletrobras Strengthening of Regulatory Agencies 21

22 BRASIL INVESTMENT FORUM 2018 May 29-30, in São Paulo, Brazil Unique opportunity for direct meetings with high-level Brazilian authorities High-level event for CEOs 2 full days of Panels with Ministers and CEOs Macroeconomic Scenario Investment Opportunities Regulatory Framework More information and pre-register:

23 THANK YOU! WALTER BAÈRE FILHO Deputy Executive Secretary of Planning, Development and Management