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BRAZIL'S REDUX:The Long-Awaited Emergence22 July 2010Department of Foreign Affairs and Trade,[object Object],Patrick Carvalho,[object Object],MA International Relations – University of Wollongong,[object Object],MSc Economics – Getulio Vargas Foundation,[object Object],PhD Candidate in Economics – ANU,[object Object],Brazilian Licensed Lawyer,[object Object],Former Head of Economic Studies Division at the ,[object Object],Federation of Industries of Rio de Janeiro,[object Object]
Sections,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],The Change of Paradigm,[object Object],The Grand Test: The Current World Crisis,[object Object],Back to the Future,[object Object],Political Scenario: The 2010 Presidential Election,[object Object],Appendix: Brazilian Macroeconomic Time-series,[object Object]
Sections,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],The Change of Paradigm,[object Object],The Grand Test: The Current World Crisis,[object Object],Back to the Future,[object Object],Political Scenario: The 2010 Presidential Election,[object Object],Appendix: Brazilian Macroeconomic Time-series,[object Object]
Basic Facts,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Federative Republic of Brazil,[object Object],Extension Area: 8.5 Mil. km2,[object Object],Urban Rate: 86.1%,[object Object],Bicameral Presidential System,[object Object],Federation of 26 States ,[object Object],(5,564 Municipalities over 5 regions),[object Object],Official Language: Portuguese,[object Object],Magna Carta: Constitution of 1988,[object Object],Currency: REAL (R$),[object Object],GDP: US$ 1.6 Tril.,[object Object],Population: 194 Mil.,[object Object],GDP per capita: US$ 8,108,[object Object]
Basic Facts,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Population:,[object Object],[object Object]
Racial Composition: 48.4% White / 50.6 % Black&Mulatto / 0.9% Others
Age Demographics: 25.7% Children / 64.3% Adults / 10.0% Elderly (over 60 years)
Life Expectancy: 72.7 years
Population Growth Rate: 0.98% per year
Human Development Index: 0.813
GINI Coefficient: 0.552,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],Position of Selected Goods  in World Production & Trade,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],Main Exports & Destinations in 2009(share over aggregate exports),[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],Energy Supply Matrix,[object Object],Source: Ministry of Energy of Brazil,[object Object]
Sections,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Basic Facts,[object Object],The Change of Paradigm,[object Object],The Grand Test: The Current World Crisis,[object Object],Back to the Future,[object Object],Political Scenario: The 2010 Presidential Election,[object Object],Appendix: Brazilian Macroeconomic Time-series,[object Object]
The Change of Paradigm,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Prelude: The Real Plan (1994),[object Object],The Macroeconomic Stability Tripod:,[object Object],[object Object]
Flexible Exchange Rate (1999)
Fiscal Responsibility Act (2000)The China Effect,[object Object]
The Change of Paradigm,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The China Effect,[object Object],Source: Economist Inteligence Unit,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Change of Paradigm,[object Object],Old Dynamics:,[object Object],External Crisis -> Devaluation -> (Dollarized) Debt Explosion & Inflation -> Fiscal & Monetary Contraction -> RECESSION (The Hen's Flight Business Cycle),[object Object],Current Dynamics:,[object Object],External Crisis -> Devaluation -> Net External Debt Creditor & Anchored Inflation Expectations -> Fiscal & Monetary Expansion -> Short Slowdown ,[object Object]
The Change of Paradigm,[object Object],BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],Business Cycles in Brazil,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Change of Paradigm,[object Object],[object Object]
Tamed prices through inflation targeting,[object Object]
Lower interest rates & expansion of credit,[object Object]
Current Account under control
Composition of Curr.Acc.: -Higher trade balances,[object Object],-Lower debt services,[object Object],-Higher profit & dividends  remittances,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Change of Paradigm,[object Object],[object Object]
Current FDI inflows rely on market stability and growthSource: The Economist, Nov 12, 2009,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Change of Paradigm,[object Object],[object Object]
Net External Creditor since 2007,[object Object]
Nominal Fiscal Surplus expected from 2013 onwards
Fiscal adjustment came mainly through an increase in taxation,[object Object]
Currency appreciation + domestic boom + fiscal adjustment led to a Net External Creditor position since 2007,[object Object],[object Object]
Highest level of purchasing power since 1979,[object Object],[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Grand Test: The Current World Crisis,[object Object],[object Object]
Irresponsible expansion of credit-Housing bubble-High leverage of financial and banking system
 Strong economic fundamentals reduced the impact of the World Crisis,[object Object]
Although the rapid credit expansion over the previous years……the credit ratio is still modest for international standards,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Grand Test: The Current World Crisis,[object Object],[object Object]
Brazil presents one of the lowest percentage shares of household income committed to mortgage and private debt
Historically high levels of Interest Rate + economic instability prevented the accumulation of mortgages,[object Object]
Healthy banking system with high relation between capital and risk weighted assets
Balanced mix of credit portfolio among State, Domestic Private and Foreign Lenders.,[object Object]
Resulting in faster recovery of the market values of Brazilian banks
Three Brazilian banks      (2 Privates, 1 Public) are ranked among the largest in the world,[object Object]
Brazil at the onset of the current World Crisis: better prepared than in the past……less turbulence in the present,[object Object]
BRAZIL'S REDUX: The Long-Awaited Emergence                           22 July 2010, Department of Foreign Affairs and Trade                                 Patrick Carvalho,[object Object],The Grand Test: The Current World Crisis,[object Object],[object Object]
Recovery of exports relies on the demand of foreign countries and on the international price of commoditiesExports & Imports12 Month-moving average (US$ Bil.),[object Object],Exports,[object Object],Imports,[object Object],Source: FUNCEX,[object Object]

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Brazil Redux

Notas do Editor

  1. 12 milhoes de familias sob Bolsa Familia