1. MINISTRY OF PLANNING Brazil and Latin America Economic Outlook Minister Paulo Bernardo Washington, May 13th, 2009

2. MINISTRY OF PLANNING 2 Presentation Impacts of the Economic Crisis Brazilian Economic Situation Counter-Cyclical Public Policies Forecast for 2009

3. MINISTRY OF PLANNING From 2003 to 2008, the Brazilian economy has grown 27.4%, an average of 4.1% per year. Real GDP Growth (% p.a.) Source: IBGE.

4. MINISTRY OF PLANNING World GDP Growth (Annual percent change) Source: IMF (WEO)

5. MINISTRY OF PLANNING BRAZIL: Contraction in the 4thQ of 2008 and Recovery in the 1stQ of 2009 Source: IBGE.

6. MINISTRY OF PLANNING Source: JP Morgan – GDW (April 9 th ) Real GDP Growth

7. MINISTRY OF PLANNING Low inflation Sound fiscal policy Low external vulnerability Strong banking sector Large domestic market Favorable Macroeconomic Conditions

8. MINISTRY OF PLANNING 10 years of Inflation Targeting */ Market Expectations (Focus: 04/17/09). Sources: IBGE and Central Bank.

9. MINISTRY OF PLANNING Primary Surplus Fiscal Policy Consistency Source: Central Bank. Nominal Deficit 1999-20022003-20062007-2008 Primary Surplus2,914,094,34 Nominal Deficit4,233,502,01 % of GDP

10. MINISTRY OF PLANNING Source: Central Bank. Commitment to a Sustainable Fiscal Policy has led to Positive Results Net Debt of the Public Sector (% of GDP)

11. MINISTRY OF PLANNING Exchange Rate Pre-Fixed Price Index Selic Debt´s Profile has changed Source: Central Bank. Duration % Months Others

12. MINISTRY OF PLANNING 12 Better Fiscal Performance (Deficit as % GDP) Source: The Economist.

13. MINISTRY OF PLANNING International Reserves (US$ billion) Source: Central Bank.

14. MINISTRY OF PLANNING Trade Balance (US$ billion) Source: Central Bank. Estimate for 2009

15. MINISTRY OF PLANNING 15 Source: The Bankers Magazine. BIS Capital Ratio (as of December 2007, %)

16. MINISTRY OF PLANNING Development of Social-Economic Classes (percentage of population between 15 and 60 years old) Brazil Today is a Middle Class Country Source: CPS/FGV (IBGE).

17. MINISTRY OF PLANNING Recovery of the Purchasing Power of the Population (percentage of the minimum wage necessary to acquire the basic food basket) Source: Dieese and MTE.

18. MINISTRY OF PLANNING Monetary and Credit policies:  Reduction in reserve requirements, cuts in the basic interest rate and increase in credit supply from state- owned banks, deposit guarantees. Fiscal policy:  Tax cuts, social programs, public investment and temporary reduction in the primary surplus. Financial support to regional integration:  Increase in the CCR (Agreement on Reciprocal Credit – Compensation System of Payments between Latin American Central Banks) limit, from US$ 120 million to US$ 1.5 billion. Counter-Cyclical Macroeconomic Policy

19. MINISTRY OF PLANNING Ex-ante Real Interest Rates (% p.a.) Sources: Central Bank and BM&F.

20. MINISTRY OF PLANNING Federal Government Investment (% of GDP) Sources: MF and MP.

21. MINISTRY OF PLANNING Temporary Value Added Tax Cuts in: Automobiles and Trucks (IPI) Construction Material (IPI) Motorcycles (COFINS) Household Appliances (IPI)

22. MINISTRY OF PLANNING Autovehicles Market – Jan & Feb (tsd units) World Crisis – lower Impact on Brazilian Internal Auto Market

23. MINISTRY OF PLANNING Financial Assistance Working Capital for the Agribusiness sector Anticipation of cash transfers to Municipalities Special credit line for long-term investment by States

24. MINISTRY OF PLANNING Minha Casa, Minha Vida The Program Minha Casa, Minha Vida (My House, My Life), launched in March of this year, aims to finance the construction of 1 million homes, at a cost of about R$ 60 billion, for families with income of up to ten minimum wages, in partnership with states, municipalities and private enterprise

25. MINISTRY OF PLANNING Brazil - Perspectives for 2009 Economic Performance - Slowdown in the 1st semester -Acceleration in the 2nd semester Foreign accounts - Reduction in the current-account deficit -Lower but positive capital inflows -Stable international reserves Labor market and domestic demand - Positive job creation -Resumption of credit expansion

26. MINISTRY OF PLANNING Early improvements Stable commodities prices Rising private credit levels (though insufficient) and falling interest rates costs (though still high) Increase in economic activity compared to the 4th quarter of 2008

27. MINISTRY OF PLANNING Source: ONS

28. MINISTRY OF PLANNING Impacts: Slowdown of exports; Price fall of primary goods; Decrease of money remittance; Less tourist inflow; FDI reduction; Cost increase of foreign credit; Downfall of international lending availability; The international crisis has affected in different ways Latin America; however not evenly.

29. MINISTRY OF PLANNING Latin America: Measures against the Crisis Monetary and Financing Policies: -Reduction and flexibilization of reserves requirements -Provision of marketability in local currency Fiscal Policy: -Tax cuts -Increase and/or anticipation of infrastructure expenditures Exchange Rate and Foreign Trade Policies: -Provision of marketability in foreign currency -Export financing -Credit with financial institutions Focal Policies: -Housing -Farming and Stockbreeding -Industry -Tourism -Micro and Small Enterprises

30. MINISTRY OF PLANNING Fiscal Stimulus Packages Source: IMF

31. MINISTRY OF PLANNING Latin American will be less affected than other regions in the World – Commodity prices recovery – A stronger macroeconomic position than in previous crises; Quick recovery needs: – Cooperation with Financial International Organization; – Effective counter-cyclical policies; – FDI attraction ability. Rising its importance in the World: – The most important energy source; – Macroeconomic stability; – Consolidated democracy. Looking Ahead:

32. MINISTRY OF PLANNING Thank you!