1. 5/8/2009 INTERNAL 1 Brazil’s economic perspectives in crisis times Dr. Rolf-Dieter Acker BASF S.A., São Paulo, Brazil Deutsch-Brasilianische Gesellschaft e.V. September 25 th 2009

2. 5/8/2009 INTERNAL 2 In a global context the South American macroeconomy has a minor position USA 10 tn Germany 2,5 tn Japan 3,3 tn China 2,9 tn NAFTA 12 tn (+2,2%) EU27 12 tn (+1,1%) Asia 10 tn (+3,9%) SA 1,9 tn (+2,9%) Brazil 1.072 bn Argentina 223 bn Brazil as the dominating country in South America ranks globally on 9 th position Source: ZZS, IMF Nominal GDP 2008 in € (CAGR 08-20)

3. 5/8/2009 INTERNAL 3 South America will remain growing above World’s GDP and faster than in the last years. Brazil will maintain its position as the major economic force Growth of GDP 07-20 in % p.a.  Brazil represents roughly half of the continent’s population and 56% of total GDP  Within the region, top six countries account for 96% of total GDP  Despite differences in growth rates, the economic power distribution doesn’t change  Chile exhibits steady growth SA Ø 4.5% Chile Peru Uruguay Venezuela Colombia Brazil Argentina Ecuador Growth of GDP 95-07 in % p.a. Circle Size reflects GDP 2020 w/o inflation SA Ø 3.1% Growth of GDP 95-07 in % p.a. World Ø 3.1% South America Asia Pacific w/o Japan Eastern Europe Western Europe Japan NAFTA Emerging Asia Oceania Circle Size reflects GDP 2020 w/o inflation World Ø 3.1%

4. 5/8/2009 INTERNAL 4 The most significant challenge in South America’s past was the macroeconomic volatility GDP Growth between 1990 and 2008 19902008 Developing Asia 7,7% p.a. South America 3,3% p.a. Advanced Economies 2,5% p.a “ Having growth rates like OECD countries and fluctuations like Asia ”

5. 5/8/2009 INTERNAL 5 Did you know that…. Embraer is No 3 in the world in production of commercial airplanes. Pentagon bought 58 patrolling airplanes form Embraer for USD $7 billions The Frankfurt Stock Exchange works with Brazilian software Petrobras is world leader in deep water exploration Odebrecht (Brazilian company) is world leader in hydroelectric machinery construction Germany imports Brazilian ITA VS30 rockets for use in experiments of micro gravity South America produces more than 3 million cars and Brazil ranks 6 th globally

6. 5/8/2009 INTERNAL 6 Automotive Personal Care Pulp Biofuels Mining (Global car sales-units) (worldwide consumption Bn USD) (production Mt) (production USD) (production M Liters) Poultry (production Mt) Beef (production Mt) Decorative Painting (worldwide consumption Mt) 4% (%South America in World GDP) Important industries in South America are relevant in global markets Relevance of South America in some global markets (2007) USA Ja- Pan China Brazil 4,5% p.a* Brazil 7% p.a* Brazil 2,5%p.a* China Cana- da JapanUSAChile Arg. W. Europe China Brazil 4,8% p.a* Brazil 7% p.a* Brazil 4,1% p.a* ChinaAUS China Rest of Europe Arg.JapanFrance Ger- many South Africa India Other S. Am. Swe- den Ger- many S. Korea Russia Para- guay AfricaFinland Brazil 5,5% p.a* USA Canada Brazil 6,3% p.a* 1º 2º 3º 4º 5º 7º 6º Soybean BioethanolPulpPersonal CareBeef AutomotiveMining PoultryGlobal Ranking * CAGR 2007 - 2020 Crop production (production tons) Crude Oil (reserve boe) Natural Gas (reserve boe) 1 2 1 2 With recent discoveries in Venezuela and in Brazil (pre-salt), South America could represent 30% of crude oil reserves in the world. (Source: BCG) South America has currently only 11% of total potential arable land farmed

7. 5/8/2009 INTERNAL 7 Industrywise Brazilian exports are highly diversified, but mainly based on natural resources Exports 2008 USD 198 bn

8. 5/8/2009 INTERNAL 8 Regarding FDI confidence Brazil outpaces many established economies Source: ATK FDI Confidence Index 2008

9. 5/8/2009 INTERNAL 9 Amongst BRIC countries Brazil shows a stable upwards trend regarding FDI Recent FDIs are targeting strong sectors like agriculture and sectors to be improved like industrial Brazil China Russia India Agriculture Industrial Services FDI Target Sectors

10. 5/8/2009 INTERNAL 10 Efficiency gains in agricultural industry boosted business throughout South America, especially in Brazil and Argentina 57,9 68,4 76,0 81,178,4 82,4 100,3 123,2 120,7 130,5 113,5 119,1 96,7 83,0 76,6 73,6 68,3 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09* 37,9 38,5 35,6 39,1 38,5 37,0 36,6 35,0 36,9 37,8 40,2 43,9 47,448,8 47,3 46,0 Production (million tons) Area (million hectares) 146% 27% Related crops: ( soybean, corn, wheat, peanuts, rice, barley, cotton, oat, bean, sunflower, castor seed, sorghum) * expected for 08/09 season Source: Conab 47 48* 142 143 *

11. 5/8/2009 INTERNAL 11 Arable Land per Region 56 413 115 11 137 Potential arable land w/o deforestation Source: FAO, 2005. Not considering areas dominantly under forest ecosystems. Million Hectares 89 Oceania Europe (North+South+West) America North Europe East + Russia + Middle East Asia Latin America * Considering Pasture as potential arable land. Sustaining the agriculture importance, South America has the highest potential of arable land

12. 5/8/2009 INTERNAL 12 Most important crop areas in South America are far away from amazonian rainforest Amazonian rainforest Intense Agricultural Use Urbanized Areas Source: Embrapa

13. 5/8/2009 INTERNAL 13 Biotech penetration in agricultural industry 95 Million Hectares Source: Clive James 2009 34 Million Hectares 157 Million Hectares 30 Million Hectares Soybean 70% (in Brazil 60% In Argentina 95%) Cotton 46%Maize 24%Canola 20%

14. 5/8/2009 INTERNAL 14 In 2009 the economic dip in South America will be less harsh compared to other regions Real GDP Growth ’08-’09 (%) Brazilian GDP depends only by 15% on exports, private consumption will grow by 1,5% in 2009

15. 5/8/2009 INTERNAL 15 Brazil’s private consumption pattern gets closer to developed countries Car Production Million Units Personal Care & Toiletries Sales US$ mn Cell Phones Lines Million of Lines All figures 2008

16. 5/8/2009 INTERNAL 16 South America LV production – monthly outlook JanFebMrzAprMaiJunJulAugSepOktNovDez 2008 2009 3,8 3,5 Total [mn] -6,5% 2008 2009

17. 5/8/2009 INTERNAL 17 LV production per region change 2009 vs. 2008 W-EU -24,3% CEE -2,5% Asia -25,1% Japan 30,2% China -8,8% Korea 18,7% India -33,0% NA -6,5% SA -20,2% EU -18,3% mn units 2009 % change

18. 5/8/2009 INTERNAL 18 For many years Brazilian retail figures showed a steady growth Even the crisis at the end of 2008 was not impacting the private consumption significantly 05/2001 05/2009 Indexed Retail Sales Figures (2003=100) June08-June09

19. 5/8/2009 INTERNAL 19 Brazilian consumers are increasingly shopping in supermarkets

20. 5/8/2009 INTERNAL 20 Successful social programs increased private consumption impacting the consumer behavior Example: Shift of wealth in Brazil (% of urban households) 2002 2007

21. 5/8/2009 INTERNAL 21 Seven good reasons to be optimistic about Brazil in crisis times Significant increase in purchasing power supports domestic markets Large food exports stabilize Brazil’s international trade Regionally diversified and growth oriented exports dampen volatility More than 220 billion USD of financial reserves to bridge gaps Sophisticated financial system and no credit or real estate bubbles No dependence on imported crude oil due to green energy matrix Stable democratic political system

22. 5/8/2009 INTERNAL 22 In general, German companies do have considerable business in Brazil The sales of major German companies in Brazil accounted for US$ 35bn in 2008

23. 5/8/2009 INTERNAL 23 5.000 employees, 3.500 in Brazil Total Sales: 2,99 billion euros (including Wintershall) 1,87 billion euros in Brazil Sales in 10 countries 22 production sites There of 8 sites in Brazil BASF IN SOUTH AMERICA 2008

24. 5/8/2009 INTERNAL 24 BASF has a veritable site footprint in South America Camaçari Puerto Montt Santiago Concón Lima Burzaco Tortuguitas General Lagos Mauá Demarchi Guaratinguetá Jaboatão Indaiatuba Bellen de Escobar Ocumare del Tuy Multi-divisional sites Single-divisional sites S. Jose d. Campos Vila Prudente Callao

25. 5/8/2009 INTERNAL 25 BASF’s sales portfolio in South America is quite different from the global one South America 2008 EUR 2,9 bn BASF Group 2008 EUR 62,3 bn 29% 22% 18% 16% 10% 5%

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