XVI Committee Meeting of
Economic Cooperation Brazil-Japan
ECONOMIC SITUATION & PERSPECTIVES
José Augusto Coelho Fernandes
Confederação Nacional da Indústria
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
2
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
3
Economic environment
Economic recovery is under way
GDP variation over the previous quarter – S.A.
0.8
1.5
0.8
0.6
0.4
0.4
0.2
0.2
0.1
-0.1
I
II
III
2011
IV
I
II
III
2012
IV
I
II
2013
Source: IBGE
4
Economic environment
Growth composition improvement
Consumption and investments
variation from the previous quarter – S.A.
6
5
4
3
2
1
0
-1
-2
-3
Better contribution
from investments in
GDP growth
I
II
III
IV
2011
Household consumption
I
II
III
IV
I
2012
II
2013
Gross fixed capital formation
Source: IBGE
5
Non regulated
Regulated
Aug/13
Jun/13
Apr/13
Feb/13
Dec/12
Oct/12
Aug/12
Jun/12
Apr/12
Feb/12
Dec/11
Oct/11
Aug/11
Jun/11
Apr/11
9%
Feb/11
Dec/10
Oct/10
Aug/10
Jun/10
Apr/10
Feb/10
Dec/09
Oct/09
Aug/09
Economic environment
Inflation pressure is decreasing
Consumer inflation
12 month variation
8%
7%
6%
5%
4%
3%
2%
1%
0%
IPCA
Source: IBGE
6
Economic environment
New pattern for the exchange rate
Exchange rate R$/US$
4.00
Lehman Brothers
3.50
49,9% valuation
3.00
49,8% devaluation
2.50
2.00
1.50
Jul/13
Jan/1
3
Jul/12
Jan/1
2
Jul/11
Jan/1
1
Jul/10
Jan/1
0
Jul/09
Jan/0
9
Jul/08
Jan/0
8
Jul/07
Jan/0
7
Jul/06
Jan/0
6
Jul/05
Jan/0
5
Jul/04
Jan/0
4
Jul/03
Jan/0
3
Jul/02
Jan/0
2
Jul/01
Jan/0
1
1.00
Source: Brazilian Central Bank
7
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
8
Jul/13
Jun/13
May/13
Apr/13
Mar/13
Feb/13
Jan/13
Dec/12
Nov/12
Oct/12
Sep/12
Aug/12
Jul/12
Jun/12
May/12
Apr/12
Mar/12
Feb/12
Jan/12
Dec/11
Nov/11
Oct/11
Sep/11
Aug/11
Jul/11
Jun/11
May/11
Apr/11
Mar/11
Feb/11
Jan/11
Industry trends
Production with volatility
Industrial production
index 2002 = 100 – S.A.
132
131
130
129
128
127
126
125
124
123
122
Source: IBGE
9
Industry trends
Industry operates with idleness
Above usual
Efective-usual capacity utilization
55
50
idleness
45
40
Below usual
Aug/…
Jun/13
Apr/13
Feb/13
Dec/12
Oct/12
Aug/…
Jun/12
Apr/12
Feb/12
Dec/11
Oct/11
Aug/…
Jun/11
Apr/11
Feb/11
Dec/10
Oct/10
Jun/10
Apr/10
Feb/10
30
Aug/…
35
Source: CNI
Values above 50 points indicate capacity utilization above usual for that month.
Values below 50 points indicate capacity utilization below usual for that month
10
Industry trends
Industry confidence on the rise again
Business confidence
65
Optimism
60
55
50
45
Pessimism
40
Jan11 Mar Mai
Jul
Set Nov Jan12 Mar Mai
Jul
Set Nov Jan13 Mar Mai
Jul
Set
Source: CNI
11
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
12
Investment projections
Investments estimates for 2011-2014
Sectores
2006-2009
in R$ billion
2011-2014
in R$ billion
variation
in %
1. Total Infraestructure
247
381
54,3%
Electric power
Telecommunications
Sanitation
Railways
Road transportation
Harbor
104
62
26
20
30
5
139
72
41
60
51
18
34%
16%
58%
200%
70%
260%
2. Total Industry
378
603
59,5%
Oil and gas
Mining
Steel mill
Chemicals
Vehicles
Electronics
Pulp and paper
205
60
28
22
25
20
18
378
62
33
40
33
29
28
84%
3%
18%
82%
32%
45%
56%
3. Buildings
353
607
72,0%
Total (1+2+3)
978
1591
62,7%
Source: BNDES
13
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
14
Challenges
Challenges to increase competitiveness
Tax
Labor
Infrastructure
Education
Innovation
15
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
CNI estimates
16
Strategic map of industry
COMPETITIVENESS WITH SUSTAINABILITY
MACRO-ECONOMIC
ENVIRONMENT
INNOVATION AND
PRODUCTIVITY
• Stability and
predictability
• Institutional environment and
incentives for innovation
• Technological consult. services
• Business management
• Global value chains
• Sectoral policies
LABOR RELATIONS
• Management of
public spending
• Modernization of
labor relations
• Labor costs
INFRASTRUCTURE
• Transportation logistics
• Energy
• Telecommunications
• Sanitation
EDUCATION
Source: CNI
• Access to markets
• Internationalization
• Investment rate
GOVERNMENT
EFFICIENCY
MARKET DEVELOPMENT
• Basic education
FINANCING
• Regional
development
• Bank credit
• Stock market
• Micro, small and
medium enterprises
LEGAL SECURITY AND RED
TAPE
•
Predictability of
rules
•
Court efficiency
•
Red Tape reduction
•
Environmental
licensing
TAXATION
• Tax load
• Elimination of burdens
on investments and
exports
• Simplification and
transparency
• Technical and vocational
education and training (TVET)
• Training of engineers and technologists
17
AGENDA
 Economic environment
 Industry trends
 Investment projections
 Challenges
 Strategic map of industry
CNI estimates
18
CNI estimates
2013
Growth rate (%)
Contribution
(p.p.)
Holsehold consumption
1,9
1,2
Government consumption
1,5
0,3
Gross fixed capital formation
8,0
1,5
Exports
0,0
0,0
(-) Imports
6,0
-0,8
Agriculture
11,0
0,6
Industry
1,4
0,4
Services
2,2
1,5
GDP components
Demand
side
Supply
side
GDP
2,4
19
XVI Committee Meeting of
Economic Cooperation Brazil-Japan
ECONOMIC SITUATION & PERSPECTIVES
José Augusto Coelho Fernandes
Confederação Nacional da Indústria