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1. Geopolitical fundamentals3. Foreign Trade1.1 Strategic Advantages 3.1 Overview of Brazils foreign trade1.2 Energy 3.2 Foreign Trade with Selected Partners1.3 Water 3. 3 Trade in Agricultural products1.4 Population / Social Classes2. The Economy4. Investment Flows2.1 GDP 4. 1 Inbound2.2 External Debt 4. 2 Outbound2.3 International Reserves2.4 Inflation5. Foreign Policy General Aspects2.5 Exchange rates2.6 Interest rates2.7 Problems2.8 Current Account2.9 Some industrial aspects2.10 Unemployment

POINTS OF PRESENTATION

Map of Brazil

1.1 Strategic AdvantagesPop over 100 MillioninhabitantsGDP overUS$ 1 TrillionGDP,Population,AgricultureArable land over20 millionshectarsARGKZTTURUKRAUSIDNPKTNIGBRAUSAINDRUSCHIBGLMEXJPNCANGERUKNLDKORSPNITAFRASource:Fiesp

Fundamentals of Brazil's EconomySource: Brazilian Ministry of Mines and Energy1.2 Sources of Energy86%14%55%45%

Grf1

1486

4555

Renewable

Non-Renewable

Sheet1

WorldBrazil

Renewable1445

Non-Renewable8655

Fundamentals of Brazil's EconomySource: MME/BEN (2008) and PNE 20301.2 Evolution of the Brazilian Energetic Matrix (%)

1.2 World's Oil ReservesSource: Oil & Gas Journal January, 2008Fundamentals of Brazil's Economy In Billion of Barrels

1Saudi Arabia2662Iran1383Iraq1154Kuwait1045UAE976Brazil947Venezuela878Russia799Libya4110Kazakhstan3911Nigeria3612USA29

2005 1.85 million barrels a day2006 Brazil achieves self sufficiency in oil2007 Discovery of Tupi oilfield with estimated 10 billion of barrels of oil. The discovery could double the Brazilian reserves.2008 Discovery of Carioca oilfield with estimated 70 billion barrels of oil. Discovery puts Brazil's oil reserves among the world's largest 1 2010 3.4 million barrels a day 2

Fundamentals of Brazil's EconomySource: 1- Financial Times, July 8 20082- Petrobras estimate1.2 Oil Production

Fundamentals of Brazil's Economy22 billion liters/year (2008)70 billion liters/year (2020)* EstimateIncrease in cultivated area by 67,000 hectaresCreation of 20,000 direct jobs and 60,000 indirect jobsInvestments in production chain estimated at around USD 1,5 billion for the next yearsCO2 emission reduction by 3.5 million tons/year1.2 Ethanol ProductionSource: Sugar Cane Industry Union - UNICA

Fundamentals of Brazil's Economy1.3 Worlds Availability of Fresh WaterSource: Brazilian National Agency of Water and Embassy of the Popular Republic of China

25%52%14%1.4 Brazil's Social Development: Division by Classes in 2008

Source: Brazilian Institute of Geography and Statistics - IBGE Fundamentals of Brazil's Economy

Grf1

14

52

25

100

Sheet1

Classes A/BClass CClasses D/E

10014.0052.0025.00

Fundamentals of Brazil's EconomySource: Brazilian Institute of Geography and Statistics - IBGE 1.4 Brazil's Social Development: Growth of Class C

% of Population

34%36%48%52%

Grf1

34

36

48

52

Total

Sheet1

2005200620072008

Total34.0036.0048.0052.00

2.1 Economic Growth % (GDP)

Source: Brazilian Institute of Geography and Statistics IBGE/IEDI

Fundamentals of Brazil's Economy

Grf1

1.1

5.7

2.9

3.7

5.3

6

GDP

Sheet1

20032004200520062007* 2008

GDP1.15.72.93.75.36

2.1 Brazil's GDP (incorporating purchase power parity rating)Total GDP US$ 2 trillion

GDP per capita US$ 10,300 (2008)

GDP per capita US$ 9.700 (2007)

Source: CIA World Book


2.1 Brazils GDP in US$

Source: Brazilian Institute of Geography and Statistics - IBGE Fundamentals of Brazil's Economy

200320042005200620072008GDP(Billion)552663.48821,0061,3001,378Population(Million)178.9181.5185.5186.7188.9196.0GDP per capita (Thousand)3,103,664,775,41 6,917,030

2.2 Development of External DebtFundamentals of Brazil's EconomySource: Central Bank* JAN/2009

YearGross Amount (US$ Billion)Net Amount (US$ Billion)1998235,11999223,92000216,92001209,92002210,72003214,9165,62004201,4148,42005169,4115,62006172,686,762007 193,2 12,86* 2008200,2(-6,6)

Fundamentals of Brazil's Economy 2.3 Brazilian International Reserves

Source: Central Bank*December/2008

YearUS$ Billion200349,296200452,935200553,799200685,8392007180,334*2008206,800

Fundamentals of Brazil's Economy 2.3 Brazilian International Reserves

Source: Central Bank*December/2008

US$ Billion

Grf1

49.29

52.9

53.799

85.839

180.3

206.8

US$ billion

Sheet1

20032004200520062007*2008

US$ billion49.2952.9053.8085.84180.30206.8

2.4 Brazil: Inflation rate %Source: Central Bank Fundamentals of Brazil's Economy

Grf1

12.5

7.8

6.8

3.5

3.15

5.9

US$ billion

Sheet1

200320042005200620072008

US$ billion12.57.806.803.503.155.9

Fundamentals of Brazil's Economy2.4 Brazils Inflation Rate Targeting

Source: Central Bank / IBGE

US$ Billion

Fundamentals of Brazil's Economy2.5 Exchange RatesSource: Central Bank

Development R$ x US$

Grf1

2.19

2.13

2.04

1.77

1.78

1.7451

1.7062

1.6816

1.7424

1.6822

1.6547

1.5919

1.5938

1.63

2.11

2.33

2.31

1,57

Plan1

31-Dec-040.3213

31-Mar-050.3227

30-Dec-050.2900

31-Mar-060.2709

29-Dec-060.2739

30-Mar-070.2653

28-Sep-070.2454

31-Dec-070.2425

29-Jan-080.2468

25-Feb-080.2385

5-Mar-080.2406

25-Mar-080.2461

10-Apr-080.2406

25-May-080.2383

30-Jun-080.2322

20-Jul-080.2338

3/31/062.19

2.13

3/30/072.04

12/31/071.77

1/29/081.78

2/1/081.75

2/25/081.71

3/3/081.68

1.74

10-Apr-081.68

25-May-081.65

30-Jun-081.59

29-Jul-081.59

8/30/081.63

10/31/082.11

12/31/082.33

1/30/092.31

Plan1

Plan2

Plan3

2.6 World's Interest Rates

Source: Economist January 2009


2.7 Main problems yet to be solvedtaxes are not competitive;

interest rates are very high;

Brazilian currency overvalued.Fundamentals of Brazil's Economy

Source: Central Bank

US$ Billion2.8 Brazil's Current AccountFundamentals of Brazil's Economy

2.9 Some Industrial Aspects: Automotive Production

Source: National Automotive Industry Association ANFAVEA Fundamentals of Brazil's Economy

YearCars and light commercial vehiclesTrucksBusesTotal20031,721.11078,93826,9901,827.03820042,181.131107,33828,7582,317.22720052,375.142117,89235,2662,528.30020062,471.224106,00133,8092,611.03420072,653.275133,90435,0842,822.26320082,848.706163,68138,2233,050.610

2.9 Some Industrial Aspects: Aeroplane TradeSource: Development, Industry and Trade Ministry - MDICFundamentals of Brazil's Economy

US$ million200320042005200620072008Exports2,0503,3713,3023,4424,3676,064Imports5918889671,2341,5934,950Balance1,4582,4822,3352,2082,7741,114Flow of Commerce2,6414,2604,2704,6765,96011,014

The Brazilian ship program is under expansion and it includes new yards and investments at the order of US$ 4 billion/year. Nowadays, Brazil has 82 ships under construction and new other 154 constructions under approval.

The 26 Brazilian main yards have a capacity of processing of 600 thousand tons of steel/year.

In 2008 the Brazilian ship industry kept the direct jobs of 40,000 people.

By October 2007, the total of the loans from BNDES* was in the amount of R$ 3,6 billion in relation to the ship industry.

This positive scenario is part of an even most promising market with the new oil reserves in the called Pre-Salt coat.

Source: National Trade Union of the Marine Reparation and Offshore IndustryFundamentals of Brazil's Economy2.9 Some Industrial Aspects: Ship Industry

Fundamentals of Brazil's Economy Steel :In 2008, Brazilian production reached record levels, closing at 33,7 million tons.

The estimate for 2009 is a decrease of 3%

Cement :In 2009, according estimates Brazil will maintain the production of 2008, which had an increase of 15% over 2007. Source: Brazilian Cement Association and Brazilian Iron Institute2.9 Some Industrial Aspects: Base Industries

Fundamentals of Brazil's Economy2.10 Unemployment rate in Brazil

Months of April, May, June, September and December 2002 to 2008Source: Brazilian Institute of Geography and Statistics - IBGE

Grf1

1312111110

1213131210

131211109

1110998

101010108

1010998.2

98777.6

April

May

June

September

November

Sheet1

2002200320042005200620072008

April1312131110109

May1213121010108

June11131191097

September11121091097

November10109888.27.6

Source: Development, Industry and Trade Ministry - MDIC * Up to December 31 2008

US$ Billion

Brazilian Trade OverallForeign Trade3.1 Overview of Brazilian Foreign Trade

YearExportsUS$ FOBImports US$ FOBBalanceUS$ FOBFlow of TradeUS$ FOB

200496,6762,8333,84159,512005118,5273,6044,93192,122006137,8091,3546,45229,152007160,64120,6240,03281,27* 2008197,94173,1924,74371,13

US$ Billion

Source: Development, Industry and Trade Ministry - MDIC * estimate

Foreign Trade3.2 Brazils Balance of Trade

Grf1

96.6762.8333.84159

118.573.644.92192

137.891.3546.45229

160.64120.640.03281

197.42173.1924.74371.13

Exports

Imports

Balance

Flow of Trade

Sheet1

2004200520062007* 2008

Exports96.67118.5137.8160.64197.42

Imports62.8373.691.35120.6173.19

Balance33.8444.9246.4540.0324.74

Flow of Trade159192229281371.13

Brazilian Flow of Trade

Source: Development, Industry and Trade Ministry MDIC December/2008

Foreign Trade3.2 Brazilian Trade with Selected Partners

Grf1

14.29USA

8.32Argentina

9.82China

3.22Netherlands

5.62Germany

1.53Venezuela

0.68South Africa

2.53Italy

3.48Japan

2Mexico

2.41Chile

46Others

371

Sheet1

USAArgentinaChinaNetherlandsGermanyVenezuelaSouth AfricaItalyJapanMexicoChileOthers

371148103621332246

Source: Development, Industry and Trade Ministry MDIC December/2008

Foreign Trade3.2 Brazilian Trade with Selected Partners

Grf1

22EUROPEAN UNIONEUROPEAN UNION

18NAFTANAFTA

10MERCOSURMERCOSUR

7AFRICAAFRICA

23ASIAASIA

20OTHERSOTHERS

371

Sheet1

EUROPEAN UNIONNAFTAMERCOSURAFRICAASIAOTHERS

37122181072320

US$ Billion

Source: Development, Industry and Trade Ministry - MDIC * December 2008

Foreign Trade3.2 Brazilian Trade with Selected Partners: European Union

YearExportsUS$ FOBImports US$ FOBBalanceUS$ FOBFlow of TradeUS$ FOB

200424,6715,998,6840,66200527,0318,238,8045,26200631,0420,2010,8451,24200740,4226,7313,6967,15* 200846,3936,1910,2082,58

US$ Billion


Foreign Trade3.2 Brazilian Trade with Selected Partners: European Union

Grf1

24.6715.998.6840.66

27.0318.238.845.26

31.0420.210.8451.24

40.4226.7313.6967.15

46.3936.1910.282.21

Exports

Imports

Balance

Flow of Trade

Sheet1

2004200520062007* 2008

Exports24.6727.0331.0440.4246.39

Imports15.9918.2320.226.7336.19

Balance8.688.810.8413.6910.2

Flow of Trade40.6645.2651.2467.1582.21

US$ Billion

Source: Development, Industry and Trade Ministry - MDIC * January 2009

Foreign Trade3.2 Brazilian Trade with Selected Partners: China

YearExports FOBImports FOBBalance FOBFlow of TradeFOB

20045,443,711,739,1520056,835,351,4812,1820068,407,990,4116,39200710,7412,61-1,8623,36* 200816,4020,04- 3,6336,44

US$ Billion


Foreign Trade3.2 Brazilian Trade with Selected Partners: China

Grf1

5.43.711.739.15

6.835.351.4812.18

8.47.990.4116.39

10.7412.61-1.8623.36

16.420.04-3.6336.44

Exports

Imports

Balance

Flow of Trade

Sheet1

2004200520062007* 2008

Exports5.46.838.410.7416.4

Imports3.715.357.9912.6120.04

Balance1.731.480.41-1.86-3.63

Flow of Trade9.1512.1816.3923.3636.44

US$ Billion

Source: Development, Industry and Trade Ministry - MDIC * December 31 2008

Foreign Trade3.2 Brazilian Trade with Selected Partners: USA

YearExports FOBImports FOBBalance FOBFlow of TradeFOB

200420,0911,358,7431,45200522,5312,669,8735,20200624,5214,659,8639,18200725,0618,726,3443,78* 200827,4225,621,7953,04

US$ Billion

Source: Development, Industry and Trade Ministry - MDIC *estimate December 31, 2008Foreign Trade3.2 Brazilian Trade with Selected Partners: USA

Grf1

2012932

23131036

24141039

2619744

2725254

Exports

Imports

Balance

Flow of Trade

Sheet1

2004200520062007* 2008

Exports2023242627

Imports1213141925

Balance9101072

Flow of Trade3236394454

Source: US Trade*estimate December 2008Foreign Trade3.2 Brazilian Trade with State of Connecticut: % Increase 2005-2008Increase of 151.46%

Source: Development, Industry and Trade Ministry MDIC - December/2008

Foreign Trade3.2 Brazilian Trade with Selected Partners: Sources of Imports

Grf1

Sheet1

Grf1

15USAUSA

12ChinaChina

8ArgentinaArgentina

7GermanyGermany

4NigeriaNigeria

4JapanJapan

2ChileChile

3FranceFrance

3South KoreaSouth Korea

3ItalyItaly

40OthersOthers

173

Sheet1

USAChinaArgentinaGermanyNigeriaJapanChileFranceSouth KoreaItalyOthers

17315128744233340

Source: International Relations and Trade Institute - Icone Brasil

Foreign Trade3.3 Brazilian Trade in Agricultural products

ProductsPosition between main exporters% of Total Global ExportsOrange juice181%Poultry135%Sugar133%Coffee130%Tobacco127%Bovine Meat124%Ethanol113%Soy232%Soy Oil228%Pork 311%Cotton35%

Source: Brazilian Confederation of Agriculture and Livestock CAN *Estimate

US$ Billion


Grf1

39434

43538

49642

58850

70960

Exports

Imports

Balance

Sheet1

2004200520062007*2008

Exports3943495870

Imports45689

Balance3438425060



DestinationsAgribusiness Exports(US$ million)Var. % 07/06(b/a)TotalExp.(c)Increased Value%2006 (a)2007 (b)BasicSemiManufactured 1.EU16.15321.23231,4440.35757,4314,5328,042. USA7.3706.840-7,1925.06519,5519,7060,753. China3.8024.69123,3810.74967,6929,233,094. Russia3.1563.4027,803.74164,3730,724,925. Argentina1.5711.91721,9714.41711,196,3182,506. Japan1.4911.76818,574.32158,4214,6526,93


Foreign Trade3.3 Brazilian Trade in Agricultural products: Main Destinations

Grf1

21EU

7USA

4China

3Russia

2Argentina

1.7Japan

11.778

Sheet1

EUUSAChinaRussiaArgentinaJapan

11,7782174321.7

Source: FAO/IBGE


Grf1

32866

81188

88132

60116

India169

4296

3145

4427

Area available for expansion

Area already utilized

Sheet1

BrazilUSARussia FederationEurope UnionIndiaChinaCanadaArgentina

Area available for expansion328818860423144

Area already utilized66188132116169964527

US$ Billion

Source: Unctad, World Investment Report 2008

Brazil

Investment Flows4.1 Foreign Direct Investments: Inflows by Country

Grf1

-36.483

21

22

24

24

40

40

40

45

51

52

53

60

108

158

223

232

Total

Sheet1

LuxemburgSwedenHong KongSingaporeMexicoItalySwitzerlandBelgiumGermanyRussiaSpainChinaCanadaFranceUnited KingdomUSA

Total-36.483212224244040404551525360108158.00223.00232.00

Source: The Economist - January 31, 2009Investment Flows4.1 Foreign Direct Investments: Inflows, 2008 estimate, $bn

US$ Billion

Source: Central Bank * December/2008

Investment Flows4.1 Foreign Direct Investment: Inflows

Grf1

212001

18.72002

12.92003

20.22004

21.52005

22.72006

362007

45.1*2008

Total

Sheet1

2001200220032004200520062007*2008

Total21.0018.7012.9020.221.522.73645.1

US$ BillionSource: Central Bank

Investment Flows4.2 Foreign Direct Investment: Outbound

Grf1

4.7342002

0.462003

14.32004

10.062005

34.912006

12.132007

20.52008

Total

20,5

Sheet1

2002200320042005200620072008

Total4.7340.4614.310.0634.9112.1320.5

Source: Unctad, World Investment Report 2008

US$ BillionBrazil

Investment Flows4.2 Foreign Direct Investment: Outflows by Country

Grf1

1.6

16.9

20.5

31.16

37.7

45.65

50.96

51.3

53.19

73.54

90.78

120

167.43

224

265

313.7

Total

Sheet1

ChinaCanadaHolandSwedenRussiaSwitzerlandBelgiumHong KongJapanItalySpainGermanyFranceUnited KingdomUSA

Total1.61720.531.1637.745.6550.9651.353.1973.5490.78120.00167.43224.00265313.70

Brazils prevailing foreign policy doctrine recognizesthe vulnerability of the country in a number of areas:

Economic;Technological;Political;Commercial; andMilitary.Source: Brazilian Ministry of Foreign Affairs General Aspects of Brazil Foreign Policy5. Foreign Policy General Aspects

Brazils present foreign policy doctrine recommends alliances with other major developing countries such as:

China;India;Russia; andSouth Africa

In order to minimize such vulnerabilities.Source: Brazilian Ministry of Foreign AffairsGeneral Aspects of Brazil Foreign Policy5. Foreign Policy General Aspects

Address:Alexandre Dumas, 1630 CEP: 04717-004 So Paulo SP Brazil

Phone: (55-11) 5188-8090 Fax: (55-11) 5184-0097 (55 11) 5184-2471 NORONHA ADVOGADOSLocated in one of the main financial centers of the city, the So Paulo office is the head office of Noronha Advogados and the oldest, having been opened in June 1978.

It concentrates the highest number of professionals and is the centre for the firms administrative and financial departments. The So Paulo office houses an efficient and up-to-date library and computer network, fully connected to the other offices, in Brazil and abroad. Contact: Durval de Noronha Goyos JniorBento Delgado Kardos

NORONHA ADVOGADOS

Durval de Noronha Goyos Jr.

[email protected]

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