1. 1 Brazil – Norway Outlook of the Brazilian Economy Ambassador Sérgio Eduardo Moreira Lima MIB Forum, NHH, Bergen, 24 October 2007

2. 2 50% of South America’s territory (70% of MERCOSUL) 8.5 million Km 2 50% of South America’s population (71.3 % of MERCOSUL) 190 million people 50% of South America’s GDP US$ 1.1 trillion (2006) Suriname Venezuela French Guyana Guyana Colombia Ecuador Peru Bolivia Chile Brazil Uruguay Paraguay ArgentinaLOCATION

3. 3 World Largest Economies GDP (real exchange rates) - US$ Billion 1. USA 13.001.000 2. Japan 4.340.000 3. Germany 2.906.000 4. China 2.668.000 5. U.K. 2.345.000 6. France 2.230.000 7. Italy 1.844.000 8. Canada 1.251.000 9. Brazil 1.068.000 Sources: Bloomberg / IMF / International Herald Tribune (Oct.15 th 2007)

4. 4 POLITICAL The 80s was a decade of consolidation of democracy. AS BRAZIL OVERCOMES ITS CHALLENGES

5. 5 ….BUSINESS OPPORTUNITIES KEEP OPENING UP. ECONOMIC The 90s was marked by overcoming inflation and bringing currency stability.

6. 6 BRAZIL MOVES TOWARDS A SUSTAINABLE PATH 2000-2010 : A DECADE OF SOCIAL CHANGES  economic growth  reduction of inequality  market expansion

7. 7 BRAZIL: a New Growth Cycle  Sustainability  Income distribution  Social inclusion

8. 8 Decrease in Poverty Decrease in Poverty Source: FGV/PNAD/IBGE.

9. 9 Reduction in Income Inequality Gini coefficient Household income Source: PNAD/IBGE.

10. 10 Fundamentals for growth  Reduction of external vulnerability  Monetary stability  Fiscal responsibility

11. Brazil Trade Surpluses (US$ billions) 48 55 58 60 73 96 118 137 49 56 47 48 63 74 91 159 115 0 20 40 60 80 100 120 140 160 19992000200120022003200420052006 2007* ExportsImports * Up to September: Exports = 116 B Imports = 85 B11

12. 12 INTERNATIONAL RESERVES */ Position at 06/Sep/2007. Source: Central Bank of Brazil (US$ billions)

13. CURRENT ACCOUNT, FOREIGN DIRECT INVESTMENT AND EXTERNAL FINANCING REQUIREMENT (US$ billions, 12 months accum. basis) 9 13 In the last 12 months up to October 2007 FDI reached a record of US$ 37.5 billions

14. REDUCTION IN THE SOVEREIGN RISK basis points Oct.2007: 161 points 14

15. NOMINAL EXCHANGE RATE (R$/US$) 1.90 1.95 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 Jan 06 Feb 06 Mar 06 Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07 Oct.2007: 1 US$ = 1,80 R$ 1122222 11222222 15

16. INFLATION: REDUCTION AND CONTROL Consumer Price Index (IPCA): Effectiveness, Expectations and Inflation Targeting (% Var. Accum. in 12 months) 8.94 5.97 7.67 12.53 9.30 7.60 5.69 3.14 3.02 3.9 3.8 0 2 4 6 8 10 12 14 19992000200120022003200420052006 2007* 2007**2008** 16

17. PUBLIC SECTOR’s NET DEBT REDUCTION (% of GDP) 45.5 48.4 50.5 52.4 47.0 46.5 44.9 43.4 41.0 38.3 35.5 20 25 30 35 40 45 50 55 1995199619971998199920002001200220032004200520062007200820092010 17

18. RATINGS 18

19. (US$ billions) CAPITAL MARKET (US$ billions) ) 0 10 20 30 40 50 60 19961997199819992000200120022003200420052006 SharesDebenturesOther August 2007:: Over US$ 65 billions 19

20. CAPITAL MARKET – IBOVESPA INDEX (points) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Oct. 2007: Over 63.000 points 20

21. 21 “A new middle class is emerging almost overnight in Brazil. During 2000 and 2005, the number of families with annual income between US$ 5.900 and US$ 22.000 has grown 50%, from 14,5 million to 22,3 million, while the number of those who received less than US$ 3.000/year has been abruptly reduced to 1,3 million.” The Economist, edition of August 18 – 24, 2007 A New Middle Class

22. 22 “Brazil is the clearest example of financial stability in Latin America” The Economist, edition of 25- 31, August 2007 Trust in Brazil

23. 23 BRAZIL-NORWAY RELATIONS 2007: a historical year State Visit of President Lula Visit of Foreign Minister Amorim 14 governmental delegations High level political & business contacts Agreements between companies and business federations

24. 24 Brazilian Embassy and Brazilian-Norwegian Chamber of Commerce State Visit of President Lula Business Seminar, Sept. 14th, 2007 www.brazilchamber.no

25. 25 Brazil-Norway Business Cooperation A Memorandum of Understanding between NHO and CNI (Confederation of Brazilian Industries) was signed during President Lula´s State Visit.

26. 26 EMBRAER One of the three main exporters in Brazil. Third largest yearly delivery of commercial aircraft (behind Boeing and Airbus). Embraer has maintenance and commercial sites in the USA and commercial offices in France, Singapore and China. Has a workforce of over 23,000 people.

27. 27 Trade Balance Brazil – Norway (US$ millions) YearExportsImportsTotal 2002170.9214.5385.5 2003280.4265.5545.9 2004320.6340.5661.2 2005444.2295.2739.4 2006583,7348,6 932,4 2007 (Sept.) 463,1261,4 724,5

28. 28 Norway became in 2006 the main market for Brazilian Exports to the Nordic countries

29. 29 Norwegian Investment in Brazil

30. 30 PAC – Program for Accelerated Growth In January the Government announced a new 4-year programme for economic growth The “Programa de Aceleração do Crescimento” (PAC) is based on investments of US$ 236 billion in infrastructure Priorities: roads, electricity, water, sanitation and housing. Reduction of regional and social inequalities

31. 31 Key Areas for Business and Cooperation  Aircraft Production and avionics medium-sized (50-110 passangers) jet planes military training aircraft Embraer is a global competitor in its category  Biofuels Bioethanol and flex-fuel cars 78.1% of sales of passenger cars in 2006 Biodiesel Scientific and technological cooperation in biofuels MOU Statoil Petrobras

32. 32 Key Areas for Business and Cooperation  Shipbuilding (19 new and 23 future contracts: platforms, oil and gas transportation by Petrobras/Transpetro and general cargo)  Small and mid-size hydroelectric plants  Environmental technology (cleaner production, residue treatment)  Fisheries and aquaculture of native species  Tropical fruits (development of market and conditioning processes)  Tourism

33. 33 Norwegian companies doing business in Brazil  Over 120 Norwegian companies are doing business in Brazil Oil sector:StatoilHydro Mining:Norsk Hydro Paper and pulp: Norske Skog Maritime services:Det Norske Veritas Shipbuilding:Aker Promar Offshore:DOF,Sevan Marine, Norskan Banking: DnB NOR, Nordea Fertilizers: Yara Telecommunications:Nera Paints:Jotun

34. 34 ”During my visit to Brazil in 2003, Norwegian businessmen declared that Norwegian investments in Brazil would reach 5 billion US$ in the next 5 years. Today I can confirm that we are reaching this investment level” King Harald V (Sept 13, 2007) ”I come to Norway convinced that the present moment opens up new and important opportunities. One of them results from a lasting cycle of sustainable growth in Brazil” President Luiz Inácio Lula da Silva ( Sept 13, 2007)

35. 35