Investment Climate In Brazil Presentation by Anand Nagaraj Citi Commercial Bank - Middle East Product and Marketing Head
Dec 28, 2015
Investment Climate In Brazil
Presentation by Anand NagarajCiti Commercial Bank - Middle East Product and Marketing Head
1)
• 40 million people moved up on the social scale, 55% in Middle Class
• On top of the pyramid is 160,000 millionaires – 11th biggest country in this respect
• Mix of economical/political stability over last 20 years
Strengthening of Social Programs to Reduce Inequality,Large Consuming Middle Class
Unemployment Rate Real Wages
1150.00
1250.00
1350.00
1450.00
1550.00
1650.00
1750.00
1850.00
Mar
-02
Aug-
02Ja
n-03
Jun-
03No
v-03
Apr-0
4Se
p-04
Feb-
05Ju
l-05
Dec-
05M
ay-0
6Oc
t-06
Mar
-07
Aug-
07Ja
n-08
Jun-
08No
v-08
Apr-0
9Se
p-09
Feb-
10Ju
l-10
Dec-
10M
ay-1
1Oc
t-11
Mar
-12
Aug-
12
16500.0
18000.0
19500.0
21000.0
22500.0
24000.0
Real Wages (LHA; s.a.) Employment (RHA; s.a)
4.05.06.07.08.09.0
10.011.012.013.014.0
Ma
r-0
2
Ma
r-0
3
Ma
r-0
4
Ma
r-0
5
Ma
r-0
6
Ma
r-0
7
Ma
r-0
8
Ma
r-0
9
Ma
r-1
0
Ma
r-11
Ma
r-1
2
Unemployment Rate Unemployment Rate (s.a)
Source: IBGE and Citi Source: IBGE and Citi
2)
• GDP reached USD 2.2 trillion in 2012
• Constitutes 42% of Latin America’s GDP
7th Strongest Economy in the World (by GDP), and 1st in Latin America
GDP Growth
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2008.I
2008.II
2008.III
2008.IV
2009.I
2009.II
2009.III
2009.IV
2010.I
2010.II
2010.III
2010.IV
2011.I
2011.II
2011.III
2011.IV
2012.I
2012.II
2012.III
2012.IV
2013.I
2013.II
2013.III
2013.IV
QoQ GDP Growth
Source: IBGE and Citi
3)
• Stable inflation since second half of the 90’s and decrease of local interest rate
• Brazilian reserves USD 36bn in 1999, USD 379bn in 2012
• “Investment Grade” rating after the global financial crisis in 2008
Brazil Has Become a Stable Business Environment
Real Interest RatesConsumer Inflation Index (IPCA)
1.490
2
4
6
8
10
12
14
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
0.0
2.04.0
6.0
8.0
10.012.0
14.016.018.0
20.0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-11
Jan-1
2
Jan-1
3
Jan-1
4
in %
Source: CitiSource: Bloomberg and Citi
4)
Wide and Diverse Production Matrix
Manufacturing; 14.00%
Professional Services / Health / Education;
16.30%
Trade; 12.70%
Real Estate; 7.90%Financial Intermediation; 7.40%
Construction; 5.80%
Farming; 5.50%
Others; 30.00%
5)
• 15th position globally for oil production – 13.9bn barrels in 2012
• Leverage towards self-sufficiency
Brazil Occupies Relevant Global Position in Oil Production
6)
• Capable of supporting global expansion of Brazilian companies
• Bovespa (Brazil’s main Stock Exchange) was 3rd biggest in the world in 2012 – USD 13tr
on negotiated volumes
• 466 companies listed on the stock exchange – 23rd ranking globally in this criteria
• Total CAP of the stocks traded in Brazil are the 7th biggest in the world
Sophisticated and Efficient Financial Market Structure
0.00
1,000.00
2,000.00
3,000.00
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
in BRLbn
Equity Market Capitalization
Source: BM&F Bovespa
7)
• FDI increased from USD 32.8bn in 2000 to USD 66.6bn in 2011
Foreign Direct Invsestment More Than Doubled in the Last 12 Years
2%
22%
52%
0%
21%
2%1%
Asia Middle EastEurope North AmericaOceania Central & South AmericaAfrica
0%
20%
40%
60%
80%
100%
June 2010 Dec 2010 June 2011 Dec 2011 June 2012
Asia & Oceania Europe Americas Middle East & Africa
Foreign Investors - (Participation by Region)
8)
• Volumes of exports grown from USD 96.7bn in 2004 to USD 256bn in 2011
• Main export products: Iron ores and concentrates (15%), Petroleum oils, crude (8%), Raw
sugar, cane (6%), Soya beans (5%), Poultry (3%)
• Major Export Partners: China (15%), United States (10%), Argentina (9%), Netherlands
(4%), Germany (4%)
• Imports grown from USD 62.8bn in 2004 to USD 226.2bn in 2011
• Main import products: Cars (6%), Petroleum oils, refined (5%), Parts and accessories of
the motor vehicles (4%), Electronic integrated circuits (3%), Medicaments, packaged (2%)
• Major Import Partners: United States (18%), China (16%), Argentina (10%), Germany
(8%), Korea, Rep. (5%)
Exports and Imports More Than Doubled over the Last 7 Years
9)
• 2014: Brazil to host the FIFA World Cup
• 2016: Brazil to host the Summer Olympic Games
• Increase in participation of private capital (both local and foreigner) on infrastructure-
Privatizations and Public and Private Partnerships of certain airports / railways / roads /
ports
Investments on Infrastructure Related to Upcoming Major Sport Events
Source: IBGE and Citi
Private Consumption x Investments
2.6
-2.4
-10
-5
0
5
10
15
20
25
2001.I
2001.IV
2002.III
2003.II
2004.I
2004.IV
2005.III
2006.II
2007.I
2007.IV
2008.III
2009.II
2010.I
2010.IV
2011.III
2012.II
Private Consumption Investment
10)
• Banking with Citi opens capability of differentiating from local comeptitions due to cross-
border capabilities and foreign trade operations
• Citi entered Brazil market 1915 (97 years)
• Citi Brazil in major parts of the territory; present in all major cities
• Headquarters in Sao Paulo
• Full product suite serve companies both locally and internationally:
• Citi Transaction Services (CTS)
• Citi Commercial Bank (CCB)
• Consumer Banking
Citi Brazil a Benchmark on Cross-Border Operations