Brazil
Economic Scenario and
Investment Opportunities
Brazilian Trade and Investment Promotion Agency
Apex-Brasil
Alessandro Teixeira
President
Regions FDI
Share of FDI inflows in selected regions
49.3%
44.9%
43.9%
38.9%
38.3%
36.5%
31.1%
27.7%
24.9%
20.9%
17.2%
16.2%
11.7%
14.4%
10.8%
4.8%
4.6%
4.2%
2.1%
1980
21.4%
20.7%
25.1%
22.8%
1985
East and South Asia
1990
Latin America
8.6%
1995
Euro Zone
8.6%
6.9%
12.4%
10.2%
6.9%
2000
EUA + Japan
13.9%
2007
Outros
FDI in World
Latin America’s FDI inflows: Brazilian share
29,7%
33,5%
34,1% 27,5%
8,2%
25,9%
7,4% 14,9% 23,3%
1993
1994
1995
1996
1997
28,6%
1998
1999
Brazil
2000
2001
30,5%
19,2% 19,9%22,4%
22,7%
2002
2003
Latin America
2004
2005
2006
2007
World Trade Trends
 World Trade Flow – acceleration from 2002 onwards
$28.0
$24.4
$21.1
$18.5
$15.2
$10.0
$10.5
1995
1996
$11.2
$11.0
$11.4
1997
1998
1999
$12.9
$12.5
$13.0
2000
2001
2002
2003
2004
2005
2006
2007
World Trade Trends
 World Exports
1999
2007
World Trade Trends
 World Exports – BRICs Growth
1999
2007
World Trade Trends
 World Imports
1999
2007
World Trade Trends
 World Imports – BRICs Growth
1999
2007
Brazilian new cycle of
economic growth
 High
rates of economic growth:
– GDP
– Consumption
– Investment
 Balanced
growth;
 Based
on foreign trade and mass
consumption;
 Reduction
of social and regional
inequalities;
Sustainable growth
Low external vulnerability:
 New foreign policy – diversifying trade
partners
 Trade surplus (US$ 25 billion – 2008)
 Current transactions surplus (US$ 3.6
billion - 2007)
 International reserves (US$ 190 billion -
2007)
Trade flow
US$ 198 bi
200
US$ 173 bi
U$S Bilhões
160
120
80
40
US$ 25 bi
0
Exports
Source: MDIC
Imports
Trade Surplus
Mass consumption – A new
middle class appears
Growth of the population’s consumption
capacity
Expansion of employment and income
Increase on minimum wage
Credit
revolution
Income Class
New social programs
2002: C = 32%
2007: C = 49%
20%
Inflation
under
control
46%
26%
A+B
C
D+E
Source: DATAFOLHA
23%
Employme
ntInRate
Brazil, from 2004 to 2007, 1.41 million new jobs were

created each year on average
Family income
R$ billion
+10.1%
+8.8%
1074
1168
2006
2007
+7.9%
1260
975
2005
2008 (*)
* forecast
Source: IBGE
Family consumption
Quarterly growth over the past year’s same quarter
15.0%
13.6%
13.0%
11.0%
9.0%
7.0%
5.0%
Source: IBGE
Sales in commerce
 In 2007: 9.68% growth over 2006
 Apr 2008: 10.26% growth – 12 month accumulated
Brazil – International
Reserves
US$ billion
Nov/08 *
230
206,4
210
190
170
150
Pay off IMF debts
130
110
90
Mar/06
70
Fluctuation between mar/06
and nov/08: 146,6 billions
59,8
50
30
nov
05
fev
06
mai
06
Source: Brazilian Central Bank
ago
06
nov
06
fev
07
mai
07
ago
07
nov
07
fev
08
mai
08
ago
08
nov
08
GDP growth in Brazil
7
PAC
GDP Growth
6
Forecast
2008-10
5,4
5,7
5
4
3
5,0
4,0
5,0
4,0
3,2
2,7
2
PAC
1,1
1
* Forecast
2002
Sources: IBGE, MF/SPE
2003
2004
2005
2006
2007
2008
2009
2010
GDP growth in Brazil
5.7%
5.2%
5.0%
3.0%
3.5%
2007
2008 *
2009 *
2010 *
3.8%
3.2%
2004
2005
2006
* Forecast
GDP growth – first semester, 2008/2007: 6.0%
Brazil - FDI inflows
US$ billion
34,30
32,78
28,85
28,58
22,45
18,99
18,70
18,16
16,59
15,19
10,79
96
10,14
97
98
99
00
01
02
03
04
05
06
07
Source: Unctad
2007: inflows = US$ 34.3 billion
99% growth over 2006
Brazil and the international
crisis
 Brazil is now much less vulnerable to
external crisis in comparison to the past
years:
 Soundness of external accounts;
 Fiscal balance and public debt reduction
 Inflation under control
 Growth sustained by domestic demand
 Even though Brazil is not immune to crisis,
impacts are limited.
Foreign confidence in Brazil
 This year, Standart & Poor’s raised its rating on Brazil to
Investment grade.
“Lowering inflation, a stable political situation and a raft of interesting mid
and small- cap companies is driving increased investor interest in Brazil making it one of the more attractive emerging markets for 2008.”
“There has been a lot of money flowing into Brazil in recent years and an
increased demand for stocks. In terms of the growth and opportunities
available, Brazil is an interesting country for investment.”
Financial Times – Feb 26, 2008
USA-Brazil Trade
USA is Brazil’s main trade partner:
US$ Billion
– 14 % of Brazilian exports went to USA in 2008
– 14,9 % of Brazilian imports came from USA in
2008
45
40
USA-Brazil Trade Flow
35
30
25
20
15
10
5
0
2001
2002
2003
2004
2005
2006
2007
Investment Opportunities
Main Sectors:
Aeronautics
Biotechnology
ICT
Infra-structure
(“PAC” and PPP)
Tourism and Real
State
Biofuels
Oil and Gas
PAC – Growth Acceleration
Program
Large investments being made in infrastructure:
 Highways
 Energy
 Transportation
 Housing
 Urbanization and sanitation
 Oil & Gas
 Raise productivity
 Boost economic expansion and job creation
 Stimulate private investment
PAC – Growth Acceleration
Program
Facts and figures

 US$249 billion of investments from 2007 to 2010
 Target annual GDP growth: 5%
Biofuels – Brazil as a key player
High growth of energy demand
Opportunity for biofuels
Brazil is the world largest biofuels
producer;
In 2007, Brazilian ethanol internal
consumption reached 16.7 billion litters,
and ethanol exports totalized 3.4 billion
litters;
Brazil represents 33.2% of ethanol global
production, and 37% of global exports;
Apex-Brasil – Investment
Promotion
 Apex-Brasil promotes investment
attraction to Brazil, specially major
capital inflows, contributing to
Brazilian competitiveness and exports.
Main Activities
Organization of missions to potential
investors
Participation in fairs and events in
Brazil and abroad
Promotion of workshops and seminars
Visits to companies and distribution
chains
Coordination of Business Rounds
Thank you!
•Tel.: 55 (61) 3426.0202
•Email:
apex@apexbrasil.com.br
•Website:
www.apexbrasil.com.br