1. Global Economic growth: how deep will it fall and when will it bounce back? 2009 BIAC Business Roundtable Lisbon - Portugal Brazil’s Perspective José Augusto C. Fernandes CNI

2. Global Economic growth: how deep will it fall and when will it bounce back? Trends in Brazil Latecomer, but highly affected In transition to recovery? Less impacted than OECD. More than India-China Policies: credit, taxes and housing construction Our problems are now opportunities Assets to recoverty Our projections before... the next revision

3. Global Economic growth: how deep will it fall and when will it bounce back? Source: OECD & IBGE GDP real % variation to the same quarter of previuos year Latecomer

4. Global Economic growth: how deep will it fall and when will it bounce back? Source: OECD Industrial production (% variation to the same month of previous year) Transition to recovery

5. Global Economic growth: how deep will it fall and when will it bounce back? Crisis impacts in Brazil Less intense than OECD. But more than India and China Industry production dropped 16,2% (sep-08 to mar-09) Crisis channels:  Credit difficulty (external lines of credit vanished)  Financial low Liquidity  Confidence reduction (both supply and demand side)  Investment  Demand reduction  Deterioration of labor market is still in place

6. Global Economic growth: how deep will it fall and when will it bounce back? IOF reduction (tax on financial operations) Postponed tax collection (PIS/PASEP and Cofins) Income tax reduction IPI reduction for the automobile industry IPI reduction for industry appliances IPI reduction for some products of construction industry What Brazilian government is doing FISCAL

7. Global Economic growth: how deep will it fall and when will it bounce back? What Brazilian government is doing Reduction of reserve requirement ratio (almost to half of it) Credit Special Program, created by BNDES to finance industrial enterprises working capital PROEX expansion (export credits) Interest rate reduction to historical lowest level Central Bank intervention (buying dollars) CREDIT SPECIAL PROGRAM Construction housing plan – plan to build 1 million subsidized houses for low income people

8. Global Economic growth: how deep will it fall and when will it bounce back? Brazilian economy: assets for recovery International reserves above US$ 200 billions Lower Brazilian internal debt exposition to currency devaluation International net creditor (international reserves are higher than external debt) Banking system is solidly structured

9. Global Economic growth: how deep will it fall and when will it bounce back? Financial market is more regulated, ensuring “no exposition” of international toxic assets (subprimes) Internal demand has been less affected than the demand of most countries Brazilian enterprises have low indebtedness level Public debt-to-GDP ratio decreased from 52,4% in 2003 to 36% in 2008 Brazilian economy: assets for recovery

10. Global Economic growth: how deep will it fall and when will it bounce back? CNI forecasts

11. Global Economic growth: how deep will it fall and when will it bounce back? Relações comerciais Brasil-México São Paulo - Abril de 2009 - www.cni.org.br