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Main topics
Inflation
Inflation is retreating Monetary policy limiting FX pass-through
Gradual economic recovery Investment is recovering Reforms will have positive effects on growth Brazil is resilient due to sound fundamentals Central Bank has buffers and instruments to mitigate adverse effects
2
Growth
UMP Exit
Inflation
Supply shocks (commodities and fresh food prices)
affected inflation trajectory in 2H12 and 1H13
6.1 4.7
1st supply shock
Mar 13
Nov 11
Mar 11
Mar 12
May 13
Jul 11
Jul 12
CPI
Source: IBGE
Jul 13
20
Jan
Apr
15 %
10
Jan 06
Jan 11
Jul 06
Jul 07
Jul 08
Jul 09
Jul 10
Jul 11
Jul 12
Jan 07
Jan 08
Jan 09
Jan 10
Jan 12
Policy rate
Source: BCB/BM&F
Jan 13
Jul 13
May
Nov
Dec
Feb Mar
Jun
Inflation is receding
8 7 6 YoY % 5 4 3 2 Feb 13 Mar 13 Apr 13 May 13 Jul 13
jun 13 6.7
ago 13 6.1
dez 13 5.8
Nov 13
Aug 13
Sep 13
CPI
Source: IBGE / BCB (Focus)
Dec 13
Jan 13
Jun 13
Oct 13
% 12 months
Dec 99
Dec 00
Dec 01
Dec 02
Dec 03
Dec 04
Dec 05
Dec 06
Dec 07
Dec 08
Dec 09
Dec 10
Dec 12
Dec 13
CPI
Source: IBGE / BCB
Dec 14
Dec 11
2.2 2.1
1.7 1.5 1.1 0.9 0.7 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.3
1.0 0.8 0.8 0.6 0.5 0.5 0.3 0.3 0.3 0.2 0.2 0.0 0.0 -0.2 -0.2 -0.3 -0.4 -0.6 -1 -0.5 0 0.5 1 1.5
* qoq sa
-1
3
9
Source: Bloomberg
7.8 5.6 3.1 3.0 2.9 2.8 2.5 2.5 2.0 2.0 1.7 1.7 0.9 0.3 -0.2 -0.6 -1.6 -1.8 -5 -2 1 4 7 10
China India South Korea* World Australia* Russia Mexico Brazil South Africa US Canada UK Germany Japan Euro Area France Italy Spain 0
2014
7.7 6.3 3.9 3.8 3.3 3.3 3.2 3.2 2.9 2.7 2.2 1.5 1.3 1.2 0.9 0.8 0.7 0.0
2 4 6 8 10
10
Stronger investment
Gross Fixed Capital Formation
5.0 4.0 3.0 QoQ S.A (%) 2.0 1.0 0.0 -1.0 4.7
3.6
1.5
-2.0
-3.0 -2.4 1Q 12
Source: IBGE
-1.9
2Q 12
-1.4 3Q 12 4Q 12 1Q 13 2Q 13
11
MoM % sa
115 55 75 95
2007 = 100 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 5.8% (YoY %)
Jul 02 Jul 03 Jul 04 Jul 05 Jul 06 Jul 07 Jul 08 Jul 09 Jul 10 Jul 11 Jul 12 Jul 13
5.5
Retail Sales
14 12 10 8 6 4
5.4% (YoY %)
Source: BCB/IBGE
Retail Sales
Unemployment Rate
YoY %
YoY % 0 20 30 40
10
1 Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 12
7 Mar 08 Total Sep 08 Mar 09 Sep 09 Mar 10 Employment Real Income Real Payroll
Sep 10
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 16.1 8.7 4.3 2.5 1.8
Credit Outstanding
production of grains
2013/2012 = 15.7% 161.9 160.1
187.3
million tons
2007
Source: IBGE
2008
2009
2010
2011
2012
2013*
13
170
130
US$ billion
250 200 150 100 50 0 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
90 50 10 -30
-70
-110
-80.1
Source: BCB
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013*
*July 2013
16
Turkey
Indonesia India
32.7 34.9 29.5 31.4 30.2 29.8 25.6 29.6 28.7 27.9 21.4 21.4 20.9 21.4
25.2 25.9
22.5 23.9 19.4 16.6 16.2 16.1 13.5 13.6 13.3 13.6 9.4 9.4
Mexico
Chile South Africa Colombia Peru Brazil
15
2012
25
35
2013*
45
55
*IIF forecast.
10 2012
15
20 2013*
25
30
17
* Brazil data includes intercompany debt transactions and domestic debt in hands of foreign investors
17.6
14.3 8.9 6.7
10
20
30
40
50
60
70
80
18
2010
114.7 85.7 82.7 50.6 48.6 48.5 46.9 43.3 42.8 40.8 35.2 32.5
197.9
USA China Belgium Hong Kong Brazil Australia Singapore Russian UK Canada France Germany Italy India Spain
2011
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
226.9
2012
72.5 65.3 62.5 58.9 54.4 48.5 47.2 44.1 39.6 27.3 26.4 22.6 19.3 0 50 100
146.7 119.7
UK France
Singapore Australia Canada Russian Ireland India Chile Luxembourg Belgium
Germany Russian
Ireland Spain Australia Switzerland France Saudi Arabia 0
30.6 29.2
50 100 150 200
150 19
Source: UNCTAD
-1.3
-3.2
-3.3 -3.5 -3.5 -4.0
111.0
82.5
Chile
India South Africa Turkey
-5.1
-6.5 -6.6
-8 -6 -4 -2 0
20
100
200
300
400
* June 2013
Source: UNCTAD
Capital flows
40 accum. 12 months (US$ billion) 35 30 25
20
15 10 5
Jul 12 Apr 12 Jan 12 Jan 13 Apr 13 Oct 12 Jul 13
Equities
Source: BCB
Fixed Income
21
Measures (weekly auctions during 2013): FX interest rate swap auctions: USD2 billion FX Repo: USD1 billion
Source: BCB
23
183
141
-3
-3 -6 -10 -12
Russian Italy
United States Turkey Japan Canada Mexico Australia United Kingdom
-15
-15 -16 -21 -22 -28
47
44 38 36 28 0 50 100 150 200 24
12 11 12 14 16 18 20
South Africa
India 0
-100
-50
95.7
40% 20% 0%
Public-owned
88.8
82.1
90.6
Private-owned
Foreign-controlled
Total
Jul 13
Domestic
Source: BCB
External
25
Final Remarks
26
28
Glossary
BCB Central Bank of Brazil
BM&F
CAD EME FDI FGV Focus IBGE IMF UMP UNCTAD