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7/29/2019 Apresentao do Presidente Alexandre Tombini, no seminrio The Brazil Infrastructure Opportunity 20130926 New York.pdf
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Alexandre Tombini
Governor
September 2013
Brazil Economic Outl
New York
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Main topics
Inflation Inflation is retreating Monetary policy limiting FX pass-t
Growth Gradual economic recovery Investment is recovering
Reforms will have positive effects
UMP Exit Brazil is resilient due to sound fun Central Bank has buffers and instr
mitigate adverse effects
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Inflation
Supply shocks (commodities and fresh fo
affected inflation trajectory in 2H12 and 1H13
Ten consecutive years of inflation within the ta
BCBs actions mitigate ER pass-through
BCB started to act early in 2013 to bring inf
declining trend
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0
3
6
9
12
15
Jan11
Mar11
May11
Jul11
Sep11
Nov11
Jan12
Mar12
May12
Jul12
Sep12
Nov12
Jan13
Mar13
YoY%
CPI Food and Beverages CPI ex-Food and Beve
1st supply shock
2nd supply
shock (freshfood)
Source: IBGE
Inflation adversely affected by supply
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5
10
15
20
Jan06
Jul06
Jan07
Jul07
Jan08
Jul08
Jan09
Jul09
Jan10
Jul10
Jan11
Jul11
Jan12
Jul12
%
Policy rate Swap reference rate - 360-day term
7.0
7.4
7.8
8.2
8.6
9.0
Nov
Dec
Jan
%
Source: BCB/BM&F
Monetary policy actionsBCB acted in early 2013 to mitigate second order effects of suppl
tapering signaling, BCB mitigate the ER pass-through risk
Communication
Policy rate
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7/29/2019 Apresentao do Presidente Alexandre Tombini, no seminrio The Brazil Infrastructure Opportunity 20130926 New York.pdf
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Inflation is receding
jun 136.7
ago 136.1
2
3
4
5
6
7
8
Jan13
Feb13
Mar13
Apr13
May13
Jun13
Jul13
Aug13
Sep13
Oct13
YoY%
CPI Expected CPI (Focus)
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0
2
4
6
8
10
12
14
16
18
Dec99
Dec00
Dec01
Dec02
Dec03
Dec04
Dec05
Dec06
Dec07
Dec08
Dec09
Dec10
Dec11
Dec12
%1
2months
CPI Inflation Re ort Jun 13
Source: IBGE / BCB
Inflation within target bandsTen consecutive years of inflation in target zone in 20
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Gradual economic recovery
Agriculture: record grain crop expected for
Employment, wages and credit
Economic growth drivers
Reforms to boost productivity and competi
Tax reforms to reduce costs
Infrastructure concessions to private secto
Rebalance: Consumption x Investment
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Source: Bloomberg * qoq sa
-0.6-0.4
-0.3-0.2-0.2
0.00.0
0.20.20.30.30.3
0.50.5
0.60.8
0.81.0
1.51.6
-1 -0.5 0 0.5 1 1.5 2
ItalySpain
RussiaEuro Area
FranceGermany
Mexico
PolandSouth Africa
USColombia
UKAustralia
CanadaBrazilChile
South KoreaJapan
TurkeyChina
Real GDP QoQ Growth in 1Q13
-0.7-0.3-0.3
-0.10.30.40.4
0.50.50.60.60.0.0
-1 0
MexicoItaly
RussiaSpain
Euro AreaPoland
Canada
ChileFrance
AustraliaUSUK
GermanySouth Africa
JapanSouth Korea
BrazilChina
TurkeyColombia
Real GDP QoQ Growt
Growth dynamics in 2013
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Source: IMF (WEO forecasts, April and July 2013)
Economic growth is expected to gath
* April.
-1.8-1.6
-0.6-0.2
0.30.9
1.71.72.02.0
2.52.52.82.93.0
3.15.6
7.8
-5 -2 1 4 7 10
ItalySpain
Euro AreaFrance
GermanyUKUS
CanadaJapan
South AfricaRussia
BrazilSouth Korea*
MexicoAustralia*
WorldIndia
China2013
0.00.70.80.91.21.31.5
2
0 2
SpainItaly
FranceEuro Area
JapanGermany
UKCanada
USSouth Africa
BrazilMexicoRussia
Australia*World
South Korea*India
China2014
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Source: IBGE
-2.4-1.9
-1.4
1.5
4.7
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.04.0
5.0
1Q 12 2Q 12 3Q 12 4Q 12 1Q 13
Q
oQ
S.A
(%)
Gross Fixed Capital Formation
Stronger investment
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55
75
95
115
Jan07
Jul07
Jan08
Jul08
Jan09
Jul09
Jan10
Jul10
Jan11
Jul11
Jan12
Jul12
Jan13
Jul13
Retail Sales
2007=100
5.4%
(YoY %)
5.8%(YoY %)
1
3
5
7
Jan12
Mar12
May12
Jul12
Sep12
Nov12
YoY%
Em lo ment Real Inc
5.5
468
1012
14
Jul02
Jul03
Jul04
Jul05
Jul06
Jul07
Jul08
Jul09
Jul10
Jul11
Jul12
Jul13
MoM%s
a
Source: BCB/IBGE
Support for domestic demand
Unemployment Rate Employment and Labo
Credit OutstaRetail Sales
010
20
30
40
Mar08
Sep08
Mar09
Sep09
Mar10
Sep10
Mar11
YoY%
Total Households (no
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160.1 161.9
120125130135140
145150155160165170175
180185190
2007 2008 2009 2010 2011 2012
milliontons
production of grains
Source: IBGE
2013/2012
= 15.7%
Est
Record grain harvest expected in 20
R f t b t th
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Reforms to boost growth
Tax reforms to reduce costs
Tax incentives for infrastructure and R&D investmen
Payroll tax cuts
Measures to increase competitiveness and investm
Building a skilled labor force (Science without
Pronatec Programs) Concessions program revamped
Highways, railroads, ports and airports
Oil & gas
B il d f UMP it
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Sound external economic fundamentals
CB actions to mitigate economic and financial risk
volatility and FX markets disruption
Brasil prepared for UMP exit
Flexible exchange rate regime first line of defense
Robust international reserves (USD374 billion)
Sound financial system
B il N t E t l C dit
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375.2
0
50100
150
200
250
300
350
400
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
US$billion
Source: BCB
International Reserves Net External
Brazil Net External Creditor
as of Sep 20th 2013
-110
-70-30
10
50
90
130
170
210
1983
1986
1989
1992
1995
1998
US$billion
E t l D bt f EME
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External Debt of EMEs
Source: Datastream / IIF
21.4
21.4
27.9
29.6
29.8
31.4
34.9
44.7
48.8
20.9
21.4
28.7
25.6
30.2
29.5
32.7
43.9
48.3
15 25 35 45 55
India
Colombia
Indonesia
Brazil
Mexico
Peru
South Africa
Chile
Turkey
External Debt / GDP
2012 2013**IIF forecast.
9.4
13.6
13.6
1
9.4
13.3
13.5
1
5 10 15
Brazil
Peru
Colombia
South Africa
Chile
Mexico
India
Indonesia
Turkey
Short Term External D
2012 *IIF forecast.
* Brazil data includes intercompany debt transactions and domestic debt inhands of foreign investors
L id t h ldi f G d
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Source: IMF (Fiscal Monitor April 2013)
Low nonresident holdings of Gov. de
6.7
8.9
14.3
17.6
19.4
23.5
29.1
29.6
31.9
32.0
32.1
33.235.1
61.3
63.5
0 10 20 30 40 50 60 70
India
Japan
South Korea
BrazilRussian Federation
Canada
Spain
Turkey
UK
South Africa
US
MexicoItaly
Germany
France
Australia2012 (% of Total Debt)
B il i L di R i i t f FDI
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Source: UNCTAD
Brazil is Leading Recipient of FDI
197.9
114.7
85.7
82.7
50.6
48.6
48.5
46.9
43.3
42.8
40.8
35.2
32.5
30.6
29.2
0 50 100 150 200
USA
China
Belgium
Hong Kong
UK
Singapore
Brazil
Germany
Russian
Ireland
Spain
Australia
Switzerland
France
Saudi Arabia
2010226.9
124.0
103.3
96.1
66.7
65.8
64.0
52.9
51.1
41.4
40.9
40.4
34.3
31.6
29.5
0 50 100 150 200
USA
China
Belgium
Hong Kong
Brazil
Australia
Singapore
Russian
UK
Canada
France
Germany
Italy
India
Spain
2011
0
USA
China
Hong Kong
Brazil
UK
France
Singapore
Australia
Canada
Russian
Ireland
India
Chile
Luxembourg
Belgium
CAD comfortably financed by FDI
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Source: UNCTAD
19.0
26.3
27.9
82.5
111.0
120.3
138.6
171.5
319.3
0 100 200 300 400
South Africa
Turkey
India
Indonesia
Mexico
Brazil
Colombia
Peru
Chile
FDI / CAD (in %, 2012)
-6.6
-6.5
-5.1
-4.0
-3
-3
-
-
-8 -6 -
Turkey
South Africa
India
Chile
Peru
Colombia
Indonesia
Brazil
Mexico
CAD (12M A
* June 2013
CAD comfortably financed by FDI
Capital flows
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0
5
10
15
20
25
30
35
40
Jan12
Apr12
Jul12
Oct12
Jan13
Apr13
accum.12
months(US$billion)
E uities Fixed Income
Source: BCB
Capital flows
Flows increased even after tapering talk (May 22 2
Timely Central Bank action to mitiga
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FX interest rate swaps and FX repo program (la
Aug 22) Goal: provide hedge to economic agents, liquidity to domes
and reduce excessive market volatility
Measures (weekly auctions during 2013):
FX interest rate swap auctions: USD2 billion
FX Repo: USD1 billion
The program succeeded in taming ER vol
providing FX hedge and liquidity
USD100 billion (equivalent) until the end
considering issues before the program announce
Timely Central Bank action to mitiga
Efforts to reduce risks are successfu
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Source: BCB
Efforts to reduce risks are successfu
Brazil has a sound financial system
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Source: IMF /FSI (latest available data)
Brazil has a sound financial system
11
12
13
13
1414
14
14
14
15
15
1616
17
17
18
10 12 14 16 18 20
Spain
Australia
Italy
Russia
IndiaJapan
Korea
France
United States
Canada
South Africa
United Kingdom
Mexico
Brazil
Turkey
Germany
Regulatory Capital to Risk-WeightedAssets
-74
-28
-22
-21-16
-15
-15
-12
-10
-6
-3
-3
9
10
-100 -50 0
Italy
Spain
South Africa
JapanUnited Kingdom
Australia
United States
India
Russian
Canada
Turkey
Korea, Republic of
Mexico
Brazil
( Provisions NPL) / Capital
Ind
South Afri
United Kingdo
Austra
Mexi
Cana
Jap
Turk
United Stat
Ita
Russi
Kore
Germa
Bra
Liquid Ass
L
Banks have a low share of external f
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Source: BCB
Banks have a low share of external fOrigin of Bank Funding
95.788.8
82.190
4.311.2
17.99
0%
20%
40%
60%
80%
100%
Public-owned Private-owned Foreign-controlled To
Domestic External
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FinalRemarks
Final remarks
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Final remarks
Inflation is receding and Central B
committed to ensure it will remain on a d
path
Brazil is prepared to face the tran
normalize global monetary environment
Growth is gathering momentum and co
program will support investment and confid
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Alexandre TombiniGovernor
September 2013
Brazil Economic OutlNew York
Glossary
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BCB Central Bank of Brazil
BM&F Brazilian Exchange Company
CAD Current Account Deficit
EME Emerging countries
FDI Foreign Direct Investment
FGV Getulio Vargas Foundation
Focus Brazilian Market Survey sponsored by BCB
IBGE Brazilian Institute of Geography and StatisticsIMF International Monetary Fund
UMP Unconventional Monetary Policy
UNCTAD United Nations Conference on Trade and Development
Glossary