Brazilian Economic Outlook Report Highlights Growth

17 Edition | December | 2012
th
Brazilian Economic
OUTLOOK Ministry of
Finance
B R A Z I L I A N G O V E R N M E N T

Ministry
of Finance
DecemberEdition|Year2012
3
Foreword
Economic Activity
Employment and Income
Inflation
Interest Rates and Credit
Fiscal Policy
External Sector
International Overview
Glossary
Summary
7
9
35
53
61
81
93
111
135

NOTE
The “Brazilian Economic Outlook” Report is published by the Ministry
of Finance. It consolidates and updates the main macroeconomic
variables related to the Brazilian economy. The report is coordinated
by the Economic Policy Secretariat (SPE) with the contribution of the
following Ministry of Finance´s bureaus: National Treasury Secretariat
(STN), International Affairs Secretariat (SAIN), Secretariat for Economic
Monitoring (SEAE) and Federal Revenue Secretariat (RFB). Data used in
thereportwereupdateduntilDecember6th
,2012.

Ministry
of Finance
7
Ministry
of Finance
Foreword
7
Brazilian economy prepared for a sustained economic growth
The Brazilian economy has shown strength in 2012, even with advanced economies remaining sluggish and world
trade stagnated. Growth accelerated in the third quarter, and the economic outlook for 2013 is strong.
In order to boost the country’s productive capacity even further, this Administration has given incentives for
investment and production, which have been showing consistent results. Not only do public sector investments play
an important role, with emphasis on the Growth Acceleration Program (PAC 2), but also private investments are key
to economic growth.
Public-private partnerships to fund relevant infrastructure projects are being stimulated, and incentives for the
development of a long-term private credit market in Brazil are being implemented. As for production, payroll tax
exemptions measures as well as energy cost actions have been taken, with benefits for several economic sectors.
Brazil is experiencing a very promising new macroeconomic balance with low interest rates and reduced financial
costs of investment, a more competitive exchange rate, and sound fiscal results.The outcome of these measures has
started to take effect, but a large part of their effects is still in the pipeline.

Brazilian Economy
OUTLOOK
Ministry of
Finance
Economic
Activity

Ministry
of Finance
10
EconomicActivity
10
Under the world economic slowdown, the Brazilian economy grew 2.4% in annual terms during the third quarter
of 2012, showing that the country´s economic activity is resilient. In addition to that, data already released show
positive results for fourth quarter.The economic outlook for 2013 is promising.
ThisAdministrationhastakenaseriesofmeasurestoincreasethecountry´scompetitiveness,encouraginginvestment
and production. For instance, infrastructure investments, through the PAC 2 and concession programs, are already in
place. Moreover, the payroll tax relief for 40 sectors, the program for reducing energy costs, and the new automotive
regime for 2013-2017 are other measures which ensures growing productive capacity.
Recoveryineconomicactivity

Ministry
of Finance
DecemberEdition|Year2012EconomicActivity
11
GDP Growth (% QoQ, sa)
Data: % change from preceding
quarter, seasonally adjusted
Source:IBGE
Producedby:MinistryofFinance
Growth accelerates
Evenlowerthanexpected,theGDPgrowthinthethirdquarterof2012ishigherthanthepreviousquarters,
indicating a recovery path. The Government stimulus measures have shown initial results, which tend to
strengthen in the coming months.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Q3 2012Q2 2012Q1 2012Q4 2011Q3 2011Q2 2011Q1 2011
0.7 0.5
0.1 0.1 0.1
0.2 0.6

Ministry
of Finance
12
GDP Growth Rate: Demand and Supply (% QoQ, sa)
Q2 2012
Q3 2012
Source:IBGE
Economic growth: supply and demand
From a supply-side perspective, the 3rd-quarter output was driven by the performances of the agricultural
(2.5%) and industrial sectors (1.1%), highlighted by manufacturing and civil construction industries. From
a demand-side perspective, household consumption supported GDP growth (0.9%).
-2
-1
0
1
2
3
4
5
6
7
8
Gross Fixed
Capital
Formation
Government
Consumption
Household
Consumption
GDPServicesIndustryAgricultural
Supply Demand
2012Q3 2012Q2
2.5
1.1
0.0
0.6
0.9
0.1
6.8
0.5
0.2
0.7
1.0
-2.0
-1.8
-1.6

Ministry
of Finance
13
Contributions to GDP Growth: Supply Side (%YoY)
GDP
Taxes
Services
Industry
Agricultural
Data: % change from
preceding year
* On a 4-quarter basis
Source:IBGE
Brazil: supply-side GDP growth
2007 2008 2009 2010 2011 2012*
GDP
Services
Industry
Agriculture
Taxes
6.1
5.2
7.5
-0.3
2.7
0.9
1.1
3.5
1.3
0.2
1.1
2.8
1.0
0.3
-1.3
-0.2
0.0
1.2
1.6
3.2
2.4
0.3
0.6
1.6
0.4
0.2
0.2
0.8
0.03
-0.2

Ministry
of Finance
14
Contributions to GDP Growth: Demand Side (%YoY)
GDP
Inventories
Exports
GFCF
Government Consumption
Household Consumption
Imports
Data: % change from
preceding year
* On a 4-quarter basis
Source:IBGE
Brazil: demand-side GDP growth
2007 2008 2009 2010 2011 2012*
6.1
5.2
-0.3
7.5
2.7
0.9
GDP
Inventories
GFCF
Government consumption
Household consumption
Imports
Exports
0.9
2.3
3.7
1.0
0.5
-2.3
0.5
2.4
3.4
0.1
0.6
-1.8
1.0
0.6
2.6
-2.1
-1.2
-1.3
3.9
0.9
4.2
-4.0
1.3
1.3
0.5
0.9
0.4
2.4
-0.4
-1.2
0.6
1.6
0.1
-0.7
-0.5
-0.2

Ministry
of Finance
15
Components of the Service Sector (% QoQ, sa)
Source:IBGE
GDP growth in 3rd quarter: the behavior of the service sector
Brazil’s service sector did not grow in the 3rd quarter of 2012, as the finance sector shrank by 1.3%.
-1.5
-1.2
-0.9
-0.6
-0.3
0.0
0.3
Administration,
health and
education
Real estate
and rentals
Other
services
Financial
intermediation
and related services
Information
services
Transport,
storage and mail
Trade
0.6
0.4
-0.1
0.5
-1.3
0.3 0.4 0.1

Ministry
of Finance
16
GDP, Household Consumption and Investment (%YoY)
GDP
Investment
Data: % change
from preceding year
Source:IBGE
Investment growing more than GDP since 2006
Except for the 2008 financial crisis, since 2006 investment in Brazil has grown much faster than GDP. On
the 2006-2011 average GDP rose 4.2 percent, whilst Investment grew 9.1 percent. This is also more than
household consumption growth (5.4 percent growth on average).
-10
-5
0
5
10
15
20
25
-0.3
9.8
13.9
13.6
-6.7
21.3
4.7
9.1
5.2
6.1
5.7
4.4
6.9
4.1
5.4
4.0
6.1
5.2
7.5
2.7
4.2
Average
2006-2011
201120102009200820072006
GDPGFCF Household Consumption

Ministry
of Finance
17
Industrial Production Index (index number, sa)
Data: index number, seasonally
adjusted (average 2002 = 100)
Source:IBGE
Industrial production points to growth recovery
Industrial production increased by 0.9% in October 2012 against September, sustained mainly by the
manufacturing of intermediate goods (0.6%). The third quarter of 2012 had already recorded an 1.1%
expansion.The result strengthens the optimism in relation to the activity recovery for the industrial sector.
90
95
100
105
110
115
120
125
130
135
O
ct2012
Sep
2012
Jun
2012
M
ar2012
Dec2011
Sep
2011
Jun
2011
M
ar2011
Dec2010
Sep
2010
Jun
2010
M
ar2010
Dec2009
Sep
2009
Jun
2009
M
ar2009
Dec2008
Sep
2008
Jun
2008
M
ar2008
Dec2007
Sep
2007
127.0
Index-number (average 2002=100)

Ministry
of Finance
18
Installed Capacity Utilization Level (%)
FGV
FIESP*
Data: %
* Sao Paulo State, only
Source:CNI,FGVandFIESP
Capacity utilization
FGV’s Installed Capacity Utilization Level (NUCI) registered a 84% level in November 2012, whereas the CNI
NUCI has been relatively unchanging between August and September. It is expected an increase towards
a full-load sustained output in the fourth quarter, reflecting the recovery in industrial production and
reduction in inventories.
75
77
79
81
83
85
87
89
84.0
81.1
NUCI - FIESP** NUCI - FGV
Nov
2012
Sep
2012
Jul2012
Apr2012
Jan
2012
O
ct2011
Jul2011
Apr2011
Jan
2011
O
ct2010
Jul2010
Apr2010
Jan
2010
O
ct2009
Jul2009
Apr2009
Jan
2009
O
ct2008
Jul2008
Apr2008
Jan
2008
O
ct2007

Ministry
of Finance
19
RetailTrade Survey (%YoY)
PMC
Broad PMC*
Data: % change from
preceding year
* Including vehicles, motorcycles,
parts and pieces, and building
materials
Source:IBGE
Robust retail sales
Both retail sales indicators follow an acceleration trend, registering 8.1% and 6.6% on a 12-month basis,
respectively.
8.1
6.6
0
2
4
6
8
10
12
14
Sep
2012
Jul2012
M
ay
2012
M
ar2012
Jan
2012
Nov
2011
Sep
2011
Jul2011
M
ay
2011
M
ar2011
Jan
2011
Nov
2010
Sep
2010
Jul2010
M
ay
2010
M
ar2010
Jan
2010
Nov
2009
Sep
2009
Broad PMC Restricted PMC

Ministry
of Finance
20
Confidence Indexes: Services and Industry (points, sa)
Services Confidence Index
Industry Confidence Index
Data: points, seasonally adjusted
Source:FGV
Stronger confidence
Services and Industry Confidence Indexes are showing grounds for optimism. Services confidence showed
a third consecutive monthly rise, and industry confidence has also improved. Both indicators signal the
continuation of the economic recovery during the fourth quarter of 2012.
90
95
100
105
110
115
120
125
130
135
140
125.4
105.2
Industry Confidence Index
Services Confidence Index
Nov
2012
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
Dec2010
Nov
2010

Ministry
of Finance
21
Vehicle Production (%YoY)
Data: % change from
same month previous year
Source:Anfavea
Vehicle production boosted by Government stimulus measures
Vehicle production has been expanding, driven by stimulus measures, such as IPI rate benefit for vehicles,
effective until December 31, 2012. In October, production increased by 20.2%, compared to the same
period of 2011. It is expected an annual record in production in the last two months of the year.
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
Dec2010
Nov
2010
O
ct2010
10.1
2.4
24.5
2.6
2.3
4.1
6.2
4.5
1.2
20.2
-4.2
-7.2
-6.2
-26.1
-3.6
-11.4
-7.5
-7.7
-7.5
-9.7
-9.1
-1.0
5.5
6.9
8.2

Ministry
of Finance
22
Manufacturing PMI (index)
Data: index
*Values above 50
indicate growth
Source:Bloomberg
Promissing economic activity outlook according to PMI indicators
Manufacturing PMI points to economic activity expansion. It shows clear recovery trend, increasing five
months in a row since July. In November, it was the highest level since April 2011.
44
46
48
50
52
54
56
58
60
PMI Brazil Manufacture
52.20
Nov
2012
Sep
2012
Jul2012
M
ay
2012
M
ar2012
Jan
2012
Nov
2011
Sep
2011
Jul2011
M
ay
2011
M
ar2011
Jan
2011
Nov
2010
Sep
2010
Jul2010
M
ay
2010
M
ar2010
Jan
2010

Ministry
of Finance
23
Household Consumption in 2020: Selected Countries (R$ trillion)
Data: R$ trillion
Source:ExameMagazine,Mckinsey
ConsultingandFecomercio
Brazilian consumer market will be the world’s 5th largest
In2020,Brazilwillbetheworld’s5thlargestconsumermarket(aroundR$3.5trillionforecastforhousehold
consumption). It is the result of the outstanding income improvement for Brazilians over the last years,
besides being a great encouragement for new investments.
0
5
10
15
20
25
Italy
UK
France
Brazil
Germ
any
Japan
China
USA
20.4
10.9
7.0
4.4
3.5
3.2
3.0
2.8
2010 2020
2.2 3.5
trillion
trillion
trillion

Ministry
of Finance
24
Consumer Market (position)
Data: position
Source:ExameMagazine,Mckinsey
Consulting,Escopo,Euromonitor,
AnfaveaandAbraciclo
Brazilian consumer market will attract more and more investments
Investors recognize the growing trend of the Brazilian consumer market and, despite the international
crisis, Brazil continues as one of the leading investment destinations.
Brazilian Consumption
Sector 2012 2020
Perfumery Articles 1st
1st
Automobiles 4th
3rd
Food and beverages 4th
3rd
Clothing 5th
3rd
Domestic Aviation 4th
-
Motorcycles 4th
3rd
Computers 3rd
-
Refrigerators 3rd
-
Products for Pet
Animals 3rd
2nd

Ministry
of Finance
25
Brazilian Grain Harvest (millions of tons)
Data: millions of tons
* Conab forecasts
Source:Conab/MAPA
Record for the Brazilian harvest
TheBraziliangrainharvestin2011/2012statesanewrecord-breakingachievement,equalto166.2million
of tons, despite the lower increase in the planted area. The growing trend of agricultural production is a
result of increasing investment in the sector, and an even better result is expected for 2012/2013.
70
80
90
100
110
120
130
140
150
160
170
180
2012/2013*
2011/2012
2010/2011
2009/2010
2008/2009
2007/2008
2006/2007
2005/2006
2004/2005
2003/2004
2002/2003
2001/2002
2000/2001
1999/2000
83.0
100.3
96.8
123.2
119.1
114.7
122.5
131.8
144.1
135.1
149.3
162.8
166.2
180.2

Ministry
of Finance
26
Agricultural Production in Selected Countries (index number)
Brazil
Russia
India
China
USA
Canada
European Union
Data: index number
(average 2005 = 100)
Source:FAO
Brazilian agriculture pushed to the forefront
Brazil is one of the world’s largest producer of agricultural goods and its production will grow even further
in the coming years. Due to outstanding agricultural production, the country has already established itself
as one of the main exporters of primary goods.
40
60
80
100
120
140
160
180
2019
2016
2013
2010
2007
2004
2001
1998
1995
1992
Brazil
Russia
China
Canada
EU*
United States
India
Estimates
2014

Ministry
of Finance
27
Federal Government Investment (R$ billion and %)
2011
2012
Data: R$ billion and % change in
the period
*YTD: year-to-date
Source:STN/MinistryofFinance
Federal investment has increased
FederalGovernmentinvestmentpacehasincreasedinthelast12months.UntilOctober2012,investments
are 22.9% above the same period last year.
0
10
20
30
40
50
60
OctSepAugJulJunMayAprMarFebJan
27.9%
23.3%
22.9%
-1.0%
3.3%
23.5%
28.9%
30.2%
29.4%
30.7%
7.7
9.6
15.7
21.1
26.2
32.8
38.8
42.5
45.2
50.9
7.8
9.3
12.7
16.4
20.2
25.1
30.0
33.2
36.7
41.4

Ministry
of Finance
28
Public Sector Investment* (% of GDP)
State-owned companies
States and Municipalities
Government
Data: % of GDP
* Only investments carried
out directly by the National
Government (not including
transfers to States and
Municipalities, to private
institutions or MCMV, which are
accounted by the IBGE as GFCF);
** Ministry of Finance forecast
Public investment is also increasing fast
The consolidated public investment is on an expansion track in 2012, contributing to better long-term
economic prospects.
0
1
2
3
4
5
1.6 1.5
1.5
1.3
0.8
0.8
0.9
1.1
1.1 1.0 1.0
1.0 1.1
1.4
1.8
1.9
1.7
1.9
1.7 1.8
1.5
2.0
1.3
1.5 1.5
1.8
1.3 1.4 1.3
1.6
1.4
1.8 1.7
2.0
1.7
1.8
2012**
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0.5 0.4 0.4 0.5 0.3 0.3 0.4 0.5 0.2 0.2 0.3 0.4 0.4 0.5 0.6 0.8 0.6 0.7
1.7 1.8
1.5
2.0
1.3
1.5 1.5
1.8
1.3 1.4 1.3
1.6
1.4
1.8 1.7
2.0
1.7
1.8
1.6 1.5
1.5
1.3
0.8
0.8
0.9
1.1
1.1 1.0 1.0
1.0 1.1
1.4
1.8
1.9
1.7
1.9
State-owned Companies States and Municipalities Federal Government

Ministry
of Finance
29
“Minha Casa MinhaVida”Housing Program (R$ million)
Data: R$ million
Booming Federal investments
For 2011-2014, it is expected massive investment on government programs, specially for “Minha Casa
Minha Vida”housing program (R$ 2.4 billion by 2014). One million of homes have been delivered and 2
million have been contracted up to October.
0
50
100
150
200
250
300
350
400
2012*201120102009
76.960
275.138 289.642 359.399
“Minha Casa Minha Vida1”
Housing Program
“Minha Casa Minha Vida 2”
Housing Program

Ministry
of Finance
30
PAC Spending: 2011-2012 (R$ billion)
2011
2012
Data: R$ billion
*YTD: year-to-date
PAC speeds up investments
PAC 2 investments have moved consistently upwards in 2012 compared to last year. For example, amounts
paid up to October 2012 (R$ 26.6 billion) are larger 27.7% than in 2011 (R$ 20.8 billion). As a result, there
will be increasing economic activity and higher country’s productive capacity.
0
5
10
15
20
25
30
5.6%
19.1%
46.9%
50.0%
44.8%
52.6%
36.3%
33.5%
35.1%
27.7%
3.1
4.1
8.0
11.3
14.2
18.6
20.3
22.3
24.3
26.6
2.9
3.5
5.5
7.6
9.8
12.2
14.9
16.7
18.0
20.82012 2011
OctSepAugJulJunMayAprMarFebJan

Ministry
of Finance
31
Petrobras Business Plan (US$ billion)
Data: US$ billion
* Released on June 14, 2012
Source:Petrobras
Petrobras: top 2 global energy investor
AccordingtotheInternationalEnergyAgency(IEA),PetrobraswillinvestUS$47.3billioninnewprojects
in 2012, just below Petrochina (US$ 48 billion). Also, Petrobras will remain as a major worldwide
investor over the next four years, based on the company’s business plan, which states a US$ 236.5
billion investment for 2012-2016.
Business Plan - Petrobras*,
2012 to 2016 (US$ billion)
Exploration and Production 141.8
65.5
Gas and Energy 13.8
Petrochemical 5.0
Distribution 3.6
Biofuel 3.8
Corporate 3.0
Total 236.5
Refining, Transportation and trading

Ministry
of Finance
32
Public Service Concession
Source:SecretariatofCivilAviation
Concession Program will leverage investments in infrastructure
Infrastructure investments in Brazil will count on the private sector’s active involvement. The airport
sector total investment will be approximately R$ 16 billion in the coming years, considering only airport
concessions in Brasilia, Guarulhos andViracopos. Also, the Logistics Investment Program considers R$ 133
billion for renovation and construction of federal highways and railways. Around 60% (R$ 79.5 billion) will
be invested within 5 years.
Total Investment: R$ 133 billion (R$ 79.5 billionin 5 years and R$ 53.5 billion from 20 to 25 years
Airport Concession: Planned Investment R$ 16.2 billion
Investment on Highways R$ 42 billion
(7.500 km)
(R$ 23.5 bi in 5 years and R$ 18.5 bi in 20 years)
Investment in Railways R$ 91 billion
(10,000 km)
(R$ 56 bi in 5 years and R$ 35 bi in 25 years)
Guarulhos
Total
in 25 years
R$ 2.85 bi
Total
in 30 years
R$ 8.70 bi
ViracoposBrasília
Total
in 20 years
R$ 4.70 bi
Planned Investment = 16.2 bi

Ministry
of Finance
33
Energy Cost Reduction
* From January 2013
Source:MinistryofMiningandEnergy
Government has adopted incentives to improve competitiveness
Amongthemeasuresaimedatincreasingdomesticfirms’competitiveness,the20.2%averagereduction
in energy prices is directed to the industrial sector. The measure will also benefit consumers, reducing
their energy bill.
Average reduction in eletricity prices*
Group Tariff Voltage level Deduction (%)
High Voltage A
A1 230 kV or more 28.0
A2 88 to 138 kV 24.7
A3 69 kV 21.5
A3a 30 to 44 kV 20.0
A4 2,3 to 25 kV 19.4
AS Underground 19.7
Low Voltage B B lower than 2,3 kV
16.2
Average 20.2

Ministry
of Finance
34
PayrollTax Exemption: 40 Sectors (R$ billion)
Data: R$ billion
*Without R$ 970 million in cash
flow relief
Source:MinistériodaFazenda
Tax benefits also stimulate competitiveness
The payroll tax relief for 40 sectors is another government measure to strengthen domestic firms’
competitiveness and encourage formal employment. Also, the construction sector has been included in
this tax benefit increasing the tax exemption in more R$ 2.85 billion in 2013.
Estimates for 2013 (R$ billion)
Sectors
AFTER:
Payroll Tax
Relief*
40 Sectors 21.60 8.70 12.8
Civilconstruction 6.28 3.43 2.85
Total 27.88 12.13 15.65
BEFORE:
Social Security
PayrollContribution
Social Security
Contribution on
Gross Revenues
(1% to 2%)

Brazilian Economy
OUTLOOK
Ministry of
Finance
Employment
and Income

Ministry
of Finance
36
EmploymentandIncome
The labor market remains a key element in the process of upward social mobility. In this context, the unemployment
rate reached 5.3% in October 2012 and approximately 1.7 million formal jobs were created in the year. Thus, it is
expected that the increasing formalization and the expansion of policies related to guarantee of basic income, access
to public services and productive inclusion continue driving the socioeconomic inclusion of the poorest.
The prospect is that the Brazilian economy will be even stronger with the increase of the middle class, or“C”class.
According to the IPEA, the“C”class will incorporate 15 million people by 2014, reaching 59% of the population.
This means an enormous consumption potential, which is fundamental to stimulate an increase in the productive
capacity in Brazil.
It is also important to emphasize that the strengthening of the social safety net increases not only household
consumption, but also the quality of the workforce that enters the labor market.The pro-equity social policies have
contributed substantially towards the rise in labor productivity. In this sense, the share of the employed population
with 11 years or more of schooling has increased from 33.6% to 46.3% between 2004 and 2011. This is another
stimulus towards new investment.
Inclusive growth driven by increased schooling

Ministry
of Finance
37
EmploymentandIncome
Unemployment Rate* (%, nsa)
Data: % share of economically
active population, not
seasonally adjuste
Source:IBGE/PME
Lower unemployment rate at the lowest level
Thejobmarkethasshownstrongdynamismin2012,expressedbythe5.3%unemploymentrateinOctober
2012, the lowest rate ever for the month.
3
6
9
12
15
5.30
O
ct2012
Apr2012
O
ct2011
Apr2011
O
ct2010
Apr2010
O
ct2009
Apr2009
O
ct2008
Apr2008
O
ct2007
Apr2007
O
ct2006
Apr2006
O
ct2005
Apr2005
O
ct2004
Apr2004
O
ct2003

Ministry
of Finance
38
EmploymentandIncome
Formal Employment: New Jobs** (thousands of jobs)
Data: thousands of jobs
* On a 12-month basis up to
October 2012
Source:MTE/CAGEDandRAIS
Solid labor market in Brazil
Evenwiththedownturnineconomicactivity,therewasanincreaseof1,689millionjobsyear-to-date.From
January 2003 to October 2012, more than 19.3 million jobs were created in Brazil.The constant creation of
formal jobs shows that the Brazilian economy is ready to return to the growth path.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012*201120102009200820072006200520042003
Formal employment (thousands)**
861
1,863
1,831
1,917
2,452
1,834
1,766
2,861
2,242
1,689

Ministry
of Finance
39
EmploymentandIncome
Rate of Formalization and Contributors to Social Security (% of employed population)
Employed population with
a formal contract
Contributors to Social Security
Data: % share of
employed population
* Until 2003: except the
population of the rural area
of Rondonia, Acre, Amazonas,
Roraima, Para, and Amapa States
Source:IBGE/PME
Greater social protection for workers
The quality of jobs in Brazil can be noticed by the level of formalization. According to the Monthly
Employment Survey, the proportion of formally employed workers reached 53.7% on a 12-month basis
up to October. Likewise, the share of contributors to social security reached 72.6% of the total employed
population in the same period.
20
35
50
65
80
2012*2011201020092008200720062005200420032002
Contributors to Social Security
Employed population with a formal contract
63.0
60.1
60.1
62.8
63.2
64.8
66.4
66.1
69.2
71.9
72.6
45.5
43.5
43.8
45.5
46.1
47.6
49.2
49.3
51.6
53.6
53.7

Ministry
of Finance
40
EmploymentandIncome
Nominal MinimumWage Evolution (R$)
Data: R$
* PLOA 2013 forecast
Source:CentralBankofBrazil
Minimum wage policy insures real gain
The growth acceleration in recent years has caused a significant expansion of per capita income in Brazil.
As a result of governmental policies, minimum wage will increase 72% in real terms from 2003 to 2013.
0
100
200
300
400
500
600
700
Jan
2013*
Jan
2012
M
ar2011
Jan
2011
Jan
2010
Feb
2009
M
ar2008
Apr2007
Apr2006
M
ay
2005
M
ay
2004
Apr2003
Apr2002
72%
200
240
260
300
350
380
415
465
510
540
545
622
671

Ministry
of Finance
41
EmploymentandIncome
Minimum wage purchasing power forWashing Machine: 1994-2012 (R$)
MinimumWage (R$)
Nominal Price ofWashing
Machine (R$)
Washing Machine/Minimum
Wage Ratio
Data: R$
Source:IBGE,GfKandLCA
Restoring the purchasing power of the minimum wage
0
200
400
600
800
1,000
1,200
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
1
2
3
4
5
6
7
8
9
1.5
622
930
Minimum Wage (R$) Nominal Price of Washing Machine (R$) Washing Machine/Minimum Wage Ratio
(R$)
• 1994:aworkerwouldspend8months’worthofminimumwagetobeabletoaffordaWashingMachine.
• 2012: he/she would spend only 1.5 month’s worth of minimum wage.

Ministry
of Finance
42
EmploymentandIncome
Minimum wage purchasing power for stoves: 1994-2012 (R$)
MinimumWage (R$)
Nominal Price of Stove (R$)
Stove/MinimumWage Ratio
Data: R$
Source:IBGE,GfKandLCA
Restoring the purchasing power of the minimum wage
0
100
200
300
400
500
600
700
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.5
622
330
Minimum Wage (R$) Nominal Price of Stove (R$) Stove/Minimum Wage Ratio
(R$)
• 1994: a worker would spend 1.9 months’worth of minimum wage to be able to afford a stove.
• 2012: he/she would spend only 0.5 month’s worth of minimum wage.

Ministry
of Finance
43
EmploymentandIncome
Bolsa Familia: IncomeTransfer Program (R$ billion, millions of households and % of GDP)
R$ billions
Millions of households
% of GDP
Data: R$ billion, millions of
households and % of GDP
October 2012
Source:MDS
“Bolsa Família”Program helps to reduce poverty
“BolsaFamilia”Programisrecognizedasoneofthemostefficientprogramsinreducinginequalityduetoits
focusonthepoorestpopulation.Besidesbeingcostefficient,itreachesmorethan13.7millionhouseholds.
0
5
10
15
20
25
0.0
0.1
0.2
0.3
0.4
0.5
2012*20112010200920082007200620052004
(% of GDP) R$ billion Number of households (million)
20.41
13.76
0.2 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.5

Ministry
of Finance
44
EmploymentandIncome
People with No Specific Social Need (% of population)
2001*
2011
Data: % share of population
* Except the rural population
of Rondonia, Acre, Amazonas,
Roraima, Para and Amapa States
Source:IBGE/PNAD
Reduction of social needs
The social safety net has impacted the promotion of rights significantly. It has enabled people to have
access to education, social security, housing and basic services. Under the human rights perspective, it has
been possible to ensure the well–being of the most vulnerable.
50
60
70
80
90
100
Access to Basic ServicesQuality HomesAccess to Social SecurityNo Educational Delay
68.8 78.7 96.0 67.860.7 63.6 95.1 59.1
2001*
2011

Ministry
of Finance
45
EmploymentandIncome
Real Income Growth in Income Groups: 2004-2011* (%)
Data: % of simple classes,
average monthly income from
all jobs
* Except information from
people with no declaration
of income from all jobs.
Deflated by INPC index.
Source:IBGE/PNAD
Income growth especially for the poorest
The real income growth was significant for the period from 2004 to 2011. Even more relevant than the
29.8% total expansion was the income growth for the 20% poorest of the population, which amounted to
around 75%.
0
10
20
30
40
50
60
70
80
M
ore
than
90
to
100
M
ore
than
80
to
90
M
ore
than
70
to
80
M
ore
than
60
to
70
M
ore
than
50
to
60
M
ore
than
40
to
50
M
ore
than
30
to
40
M
ore
than
20
to
30
M
ore
than
10
to
20
Up
to
10
Total
29.8 73.8 75.3 48.5 49.9 43.8 38.4 36.5 30.3 24.8 20.8
2004-2011 Change
20%
poorest
20%
richest
Income deciles

Ministry
of Finance
46
EmploymentandIncome
Gini Index: Average Real Earnings** (index)
Data: Measurement ranges
from zero (perfect equality) to 1
(maximum inequality)
* Excludes the rural population of
the following states: Rondônia,
Acre, Amazonas, Roraima, Pará
and Amapá
** People over 10 years of age.
BaseduponthepercapitaIncome
Source:IBGE/PNAD
Declining income inequality in Brazil
The Gini Index, used to measure income inequality, has fallen steadily, from 0.559, in 2004, to 0.508, in
2011. The decrease comes from more years of schooling of the poorest population, alongside with the
expansion of conditional income transfer programs and more social inclusion opportunities.
0.50
0.55
0.60
0.6
0.6
0.6
0.6
0.6
0.5
2011
2009
2008
2007
2006
2005
2004
2001*
1990*
1981*
0.564
0.602
0.552
0.548
0.534 0.530
0.524
0.508
0.572
0.559
0.65

Ministry
of Finance
47
EmploymentandIncome
Recent-Progress SEDA Score (index)
Brazil
Average BRIC
Data: index
* SEDA assesses the performance
of 150 nations around the world
across a series of dimensions
including governance, education,
infrastructure and economic
stability with the aim of seeing
which countries are performing
best in improving well-being
and economic opportunities
for their citizens.
Source:BostonConsultingGroup
Brazil stands out in the SEDA score
For most of the 10 categories of New Sustainable Economic Development Assessment (SEDA) launched
by the Boston Consulting GroupBoston Consulting Group index, Brazil has scored better than the BRICS
average. Brazil, Poland, Indonesia and New Zealand are improving faster than GDP growth would suggest.
Whenitcomestotranslatingwealthintocitizenwell-beingthereportrevealsastrongcorrelationbetween
the best performing nations and good governance.
0
20
40
60
80
100
Infrastructure
Environment
Health
Education
Governance
CivilSociety
Income
Equality
Employment
Economic
Stability
Income
29
20
27
21
58
Brazil
Average
BRIC

Ministry
of Finance
48
EmploymentandIncome
Social Classes (million of people)
Data: million of people
* Forecasts. Baseline: 6,5%YoY
income growth rate
Source:IBGEandIPEA
15 million additional Brazilian people can be included in the new
middle class
The growth of ABC classes and consequent reduction of DE classes have been translated into poverty
reduction and better income distribution, both playing a key role to the expansion of the domestic market.
According to IPEA forecasts, C class should correspond to 59% of population by 2014.
A Class
B Class
C Class
D and E
Classes
Total: 175 million Total: 188 million Total: 192 million Total: 196 million
2003 2009 2011 2014*
6.3
7.0
65.9
96.2
9.6
10.4
73.3
94.9
12.6
14.5
115.2
53.8
10.5
11.2
100.3
69.6

Ministry
of Finance
49
EmploymentandIncome
Household Consumption and Broadly Defined Payroll* (% Q/Q)
Household consumption
Broadly defined payroll
Data: % change same quarter
previous year, annualized
* Including lwages, dividends,
saaries, social security benefits,
“Bolsa Familia”and others.YTD
October.
Source:IBGE,MDS,FGTSandSTN
Impact of social inclusion on demand
The 8.3% interannual increase of broadly defined payroll in the third quarter of 2012 boosted household
consumption, sustaining the domestic market strength.
-6
-4
-2
0
2
4
6
8
10
12
14
Sep
2012
Jun
2012
Sep
2011
Dec2010
M
ar2010
Jun
2009
Sep
2008
Dec2007
M
ar2007
Jun
2006
Sep
2005
Dec2004
M
ar2004
Jun
2003
Sep
2002
Dec2001
M
ar2001
Jun
2000
8.3
3.4
Expanded Wage Mass

Ministry
of Finance
50
EmploymentandIncome
People Employed with more than 11Years of Schooling (% of total)
Data: % of total
Source:IBGE/PNAD
More qualified workers
One of the main elements for reducing income inequality and improving productivity is the educational
level.Between2004and2011,occupiedpopulationwithmorethan11yearsofschoolingwentfrom33.6%
to 46.4%, respectively.
20
26
32
38
44
50
2011200920082007200620052004200320022001
28.8 30.7 32.5 33.6 35.2 37.4 39.0 41.2 43.2 46.4

Ministry
of Finance
51
EmploymentandIncome
“Qualified”Beginning Employees** and First Job Admissions (% and millions)
Share of“Qualified”Beginning
Employees
First Job Admissions (millions)
Data: % share and millions
* On a 12-month basis up
to October 2012
** At least completed
High School
Source:MTE/CAGED
Growing opportunities in the youth labor market
The growth of the Brazilian economy increased the number of job opportunities for young people, which
has been accompanied by an improvement in their level of education. According to CAGED, in 1996, 1.7
million new workers were hired, while 17.2% had at least completed high school. On a 12-month basis up
to October 2012, the figures were 2.8 million and 54.9%, respectively.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
10
20
30
40
50
60
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
First Job Admissions Share of "Qualified" Beginning Employees*
2.83.13.02.52.82.52.32.32.11.81.91.91.91.61.81.7 1.7
54.953.953.3
51.3
48.847.246.0
43.3
39.6
36.4
33.6
31.5
28.7
25.7
22.0
19.4
17.2

Brazilian Economy
OUTLOOK
Ministry of
Finance
Inflation

Ministry
of Finance
54
Inflation
Consumerpriceinflationratesincreased inthethirdquarterof2012,drivenmainlybytheimpactofextremeweather
conditionsonagriculturalproduction.Thecombinationofhigherthanusualpressuresinsomefreshfoodpricesinthe
Braziliandomesticmarket,andinimportantagriculturalcommoditiesintheinternationalmarket,duetothedrought
in the US, caused an acceleration of inflation in mid-2012, which peaked in October.
Since then, inflation pressures have begun to ease, as producer prices related to important items such as soybeans,
corn and wheat are clearly pointing to a retreat to lower levels. As well as that, several fresh food items are showing
monthly deflation rates. This scenario shows that more relief should arrive in coming months, helping bring down
consumer price inflation and also helping to drive the yearly IPCA to the center of the target set by the National
Monetary Council.
Inflation rate under control

Ministry
of Finance
55
Inflation
CPI Inflation - IPCA Index (%YoY)
InflationTarget
Upper and Lower Bounds
IPCA
Data: % change from
preceding year
* According to the Central Bank
of Brazil’s Inflation Report
(September 2012)
Source:IBGEandCentralBankofBrazil
Inflation within the target range
In the first half of 2012, the reduction of monthly inflation was signaling that the 12-month inflation rate
would move around the inflation central target in Brazil. In the second half, however, significant increases
in some agricultural commodities, primarily related to the effects of the U.S. drought, pressured consumer
prices, driving IPCA inflation to a level slightly above the central target, but within the tolerance bounds.
0
2
4
6
8
10
12
14
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
8.9 6.0 7.7 12.5 9.3 7.6 5.7 3.1 4.5 5.9 4.3 5.9 6.5 5.2
IPCA Target Center Upper and Lower Bounds
, ,

Ministry
of Finance
56
Inflation
Agricultural Prices and IPCA Index (% 3-mth ma)
IPCA
IPA-DI Agricultural Index
Data: % change on a
3-month moving average
Source:IBGE
Agricultural shocks affected CPI inflation
The CPI-Food inflation represents 25% of the total Brazilian IPCA and responds with lags to changes in
producer food prices. It means that the current slowdown in PPI-Food inflation, measured by the IPA-
Agricultural index will ease IPCA inflation in the coming months.
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
O
ct2012
Aug
2012
M
ay
2012
Feb
2012
Nov
2011
Aug
2011
M
ay
2011
Feb
2011
Nov
2010
Aug
2010
M
ay
2010
-5
0
5
10
15
20
IPCA
IPA-DI Agricultural
IPCA, IPA-DI Agricultural

Ministry
of Finance
57
Inflation
CPI Inflation - Chained IPCA and IPCA-15 Indexes (% MoM)
Data: % change from
preceding month
Source:IBGE
After reaching its peak in October, inflation starts to decline
ConsumerpricesinBrazilroseattheirfastestpaceinOctober2012,mainlyduetotheeffectsofthedrought
in the US. Since then, IPCA inflation has started to decline, which is a trend that is expected to continue in
the coming months.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
IPCA
IPCA-15
Nov
2012
Oct
2012
Sep
2012
Aug
2012
Jul
2012
Jun
2012
May
2012
Apr
2012
Mar
2012
Feb
2012
Jan
2012
Dec
2011
Nov
2011
Oct
2011
Sep
2011
0.53
0.53
0.42
0.43
0.46
0.52
0.56
0.50
0.65
0.56
0.53
0.45
0.25
0.21
0.43
0.64
0.51
0.36
0.18
0.08
0.33
0.43
0.39
0.41
0.48
0.57
0.65
0.59
0.54

Ministry
of Finance
58
Inflation
Inflation: IGP-M and Main Components (%YoY)
IGP-M
IPA-M
INCC-M
IPC-M
year on a 12-month basis
Source:FGV
General Price Index already decelerating
Aftertwoconsecutivequartersofacceleration,the12-monthGeneralPriceIndex(IGP-M)inflationstarteda
decreasing trend, reaching a percentage below 7.0% in November 2012. Lower producer prices (measured
by the IPA index) in the past two months have played an important role in easing the pressure on the
Brazilian IGP inflation.
-6
-3
0
3
6
9
12
15
Nov
2012
Sep
2012
Jul2012
M
ay
2012
M
ar2012
Jan
2012
Nov
2011
Sep
2011
Jul2011
M
ay
2011
M
ar2011
Jan
2011
Nov
2010
Sep
2010
Jul2010
M
ay
2010
M
ar2010
Jan
2010
Nov
2009
7.33
6.96
7.30
5.77
INCC-MIPC-MIPA-MIGP-M

Ministry
of Finance
59
Inflation
General Price Indexes (chained) (% MoM)
Data: % change from
preceding month
Source:FGV
Deflationary trend in producer prices
As prices of agricultural commodities began to decline, producer prices in Brazil also started to cool down,
and the latest IPA measurements have been showing deflation since October 2012. Raw materials, for
instance, decreased by 1.86% in the October IGP-DI. The trend is likely to affect other prices along the
supply chain.
October 2012 November 2012
IGP-10 IGP-M IGP-DI IGP-10 IGP-M
IGP 0.42 0.02 -0.31 -0.28 -0.03
IPA 0.40 -0.20 -0.68 -0.57 -0.19
Production stage
Final goods 0.60 0.07 -0.44 -0.70 -0.5
Intermediate goods 0.67 0.41 0.07 0.09 0.25
Basic goods -0.16 -1.24 -1.86 -1.24 -0.41
Origin
Agriculture 0.53 -0.57 -1.34 -1.10 -0.41
Industrial 0.34 -0.05 -0.42 -0.35 -0.1
IPC 0.57 0.58 0.48 0.36 0.33
INCC 0.24 0.24 0.21 0.22 0.23
Construction services and materials 0.50 0.49 0.42 0.35 0.22
Labor 0.00 0.01 0.01 0.09 0.24

Brazilian Economy
OUTLOOK
Ministry of
Finance
Interest Rates
and Credit

Ministry
of Finance
62
InterestRatesandCredit
From August 2011 up to October 2012, the Central Bank of Brazil lowered the policy rate by 525 basis-points, bringing
both nominal and real rates to their lowest levels in the recent Brazilian monetary history. In fact, spreads and lending
ratesinthefinancialsystemhavealsofallentorecordlows,althoughstillathighlevels.
Brazil is now even more focused on encouraging the development of the capital and long-term private credit markets.
The country’s financial system is sound, operating in accordance with Basel principles, and it is actively participating
in the development of important financial instruments, such as financial bills, FDICs, debentures, and other long-term
corporatebonds.
As a matter of fact, this new environment of lower interest rates and investment opportunities has already begun to
influence the decision-making process of economic agents. It will positively impact investment and production even
further,asinvestorsleavebehindthetimewhentheBrazilianeconomywasusedtohighshort-terminterestrate.
Interest rate at its lowest level ever

Ministry
of Finance
63
Brazil: Real Ex-Ante Interest Rates* (% pa)
Data: % per annum
* 360-day swap deflated by
inflation expectations for the 12
months ahead; 2012: November
30; 2001-2011: December 31
Real interest rate at its lowest level due to sound macroeconomic
fundamentals
Short-termrealinterestratesinBrazilhavebeenshowingasignificantdecreaseforthepasttenyears,from
14.0% in December 2002 to 1.8% in November 2012. For the last 10 years, it has been a result of credible
and sound monetary and fiscal policy coordination.
0
4
8
12
16
2012**2011201020092008200720062005200420032002
Average
2002-2005 = 11.5
Average
2006-2010 = 6.9
Average
2011-2012 = 3.2
14.0 9.4 11.2 11.4 7.9 7.7 6.9 5.8 6.2 4.5 1.8

Ministry
of Finance
64
Real and Nominal Interest Rates* (% pa)
SELIC interest rate target
Real ex-ante interest rate*
Data: % per annum
* 360-day swap deflated by
inflation expectations for the
12 months ahead
Selic benchmark interest rate at its lowest level ever
CentralBankofBrazilhasreduceditsbenchmarkinterestrate(Selic)sinceAugust2011.Thelatestreduction
in October 2012, from 7.50% to 7.25%, implied the lowest rate ever.The real interest rate reached 1.80%
on November 30, 2012.
1.80
7.25
0
5
10
15
20
25
30
Real Ex-Ante Interest Rates Selic benchmark
Nov
2012
O
ct2012
Apr2012
O
ct2011
Apr2011
O
ct2010
Apr2010
O
ct2009
Apr2009
O
ct2008
Apr2008
O
ct2007
Apr2007
O
ct2006
Apr2006
O
ct2005
Apr2005
O
ct2004
Apr2004
Nov
2003

Ministry
of Finance
65
Interest Rates: DI Contracts* (% pa)
Jan 2013
Jan 2014
Jan 2015
Data: % per annum
* DI: one-day interbank deposits
Long-term interest rates declining in Brazil
After a widespread decline throughout the last 12 months, the long-term rates traded in the futures DI
stabilized at a level close to the current Selic rate. The difference between the curves expresses the risk
associated with the exposure duration.
7.2
7.8
7.17
8
9
10
11
12
13
Nov
2012
O
ct2012
Jul2012
Apr2012
Jan
2012
O
ct2011
Jul2011
Apr2011
Jan
2011
O
ct2010
Jul2010
Apr2010
Jan
2010
Jan 2015Jan 2013 Jan 2014

Ministry
of Finance
66
Interest Rates and Average Maturity (% pa and days)
Average maturity (days)
Interest rates (%YoY)
Data: % per annum
and number of days
Lower Selic rate and banking spreads benefit borrowers
Lower interest rates and banking spreads have been benefitting final borrowers. Interest rates on loans
to individuals reached 35.4 percent, whereas rates on loans to corporations reached 22.1 percent. These
percentages are well below the 2011 average and show sharp decline throughout 2012, with reductions
of 9.7 p.p. and 6.6 p.p. for individuals and corporations, respectively. In the opposite direction, average
maturity signaled slight increase in the period.
300
350
400
450
500
550
600
650
40
45
50
55
60
O
ct2012
Jun
2012
Dec2011
Jun
2011
Dec2010
Jun
2010
Dec2009
Jun
2009
Dec2008
M
ay
2008
200
250
300
350
400
450
Average Maturity
20
24
26
28
30
32
34
Interest Rates
O
ct2012
Jun
2012
Dec2011
Jun
2011
Dec2010
Jun
2010
Dec2009
Jun
2009
Dec2008
M
ay
2008
Individuals Corporations
620.5
35.4
431.8
22.1
Average Maturity
Interest Rates

Ministry
of Finance
67
Average Interest Rate on Lending for Individuals and Corporations (%YoY)
Jan 2012
Oct 2012
Data: % change from
the preceding year
Credit becomes easier and cheaper
Credit has become easier and cheaper to individuals and corporations in Brazil. The average interest rate
on lending to individuals dropped 9.7 percentage points year-to-date up until October 2012, from 45.1%
to 35.4%. As for the average rate on lending to corporations, it fell by 6.6 percentage points over the same
period, from 28.7% to 22.1%.
0
10
20
30
40
50
CorporationsIndividuals
Oct 2012 Jan 2012
35.4 22.145.1 28.7

Ministry
of Finance
68
Banking Spread to Individuals and Corporations (pp)
Jan 2012
Oct 2012
Data: percentage point
* Spread = Lending Rate -
Funding Rate
Lower banking spread to individuals and corporations
Although still high in comparison with other economies, spreads on loans to individuals and corporations
have been declining in Brazil lately.The former went from 34.9 p.p. in January 2012 to 27.8 p.p. in October
2012, while the latter went from 18.5 p.p. to 15.0 p.p. in the same period.
0
5
10
15
20
25
30
35
40
45
50
CorporationsIndividuals
Oct 2012 Jan 2012
27.8 15.034.9 18.5

Ministry
of Finance
69
Individuals: CreditTransactions (R$ billion)
Real Estate Loans
Car Loans
Payroll Loans
Data: R$ billion
Housing credit stands out
Housing credit has showed an outstanding performance in recent years, encouraging investment, growth
and employment in the construction sector and other segments of the economy. Over the past 12 months,
totalhousingcreditgrewby39%,reachingR$263billioninOctober2012,provingfarsuperiorperformance
than other segments.
0
50
100
150
200
250
300
350
Payroll Loans Car Loans
Real Estate Loans
O
ct2012
Jan
2012
Jan
2011
Jan
2010
Jan
2009
Jan
2008
263.0
319.0
184.3

Ministry
of Finance
70
Families who cannot Afford to Pay their Debts (% of total)
Data: % of total
Source:CNC
Families keeping debt under control
The percentage of families unable to pay their overdue bills keeps falling, standing at a level below the
same period in 2010 and 2011.
5
6
7
8
9
10
11
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
Dec2010
Nov
2010
O
ct20109.5
9.0
8.3
7.9
7.7
8.4
7.8
8.6
8.4
8.1
8.2
8.0
8.2
7.3
7.2
6.9
7.3
6.7
6.9
7.8
7.5
7.3
7.1
7.1
7.0

Ministry
of Finance
71
Outstanding Credit: Earmarked and Non-Earmarked Resources (R$ Billion and % of GDP)
% of GDP
Earmarked resources
Non-earmarked resources
Data: R$ Billion and % of GDP
Earmarked credit at the forefront of credit expansion
InOctober2012,thetotalcreditvolumeinBrazilreachedtheamountofR$2.27trillion,corresponding
to 51.9% of GDP. Total non-earmarked resources recorded R$ 1.44 trillion, with annual increase of
14.2%, whereas total earmarked credit summed R$ 830 billion, a rise of 20.9% as compared to the
same period last year.
0
500
1,000
1,500
2,000
2,500
O
ct2012
O
ct2011
O
ct2010
O
ct2009
O
ct2008
O
ct2007
O
ct2006
O
ct2005
O
ct2004
O
ct2003
44.1%
44.5%
47.5%
51.9%
39.6%
33.6%
30.0%
27.3%
25.7%
24.3%
155 177
190
222
262
337
435
565
687
830
248 310
386
476
619
848
932
1,079
1,260
1,439
Earmarked Non-Earmarked % of GDP

Ministry
of Finance
72
CAIXA Housing Credit (R$ billion)
Disbursed
Contracted
Data: R$ billion
Source:CaixaEconomicaFederal
CAIXA contributes heavily to the expansion of housing credit
Since 2008, CAIXA housing credit has grown on a 40% yoy pace.The expected volume for 2012 represents
an amount to around R$ 100 billion (2.4% of GDP).
0
20
40
60
80
100
2012*201120102009200820072006200520042003
Contracted Disbursed
4.1
5.9
8.8
13.9
20.7
22.7
47.1
75.9
80.1
100.0
4.2
4.4
7.1
10.6
11.7
18.1
31.4
55.6
69.6
92.1

Ministry
of Finance
73
Credit Operations in Brazil (% of GDP)
Earmarked resources*
Non-Earmarked Resources
Data: % of GDP
*YTD October 2012
Sustained rates of credit growth in Brazil
Credit operations as a share of GDP have been growing in a sustained pace in Brazil. In October 2012,
lending with non-earmarked funds represented 32.9% of GDP, while earmarked credit stood at 19.0% of
GDP. Mortgage has expanded at a rate of approximately 40% per annum, and now represents 6.0% of GDP.
0
10
20
30
40
50
60
Non-Earmarked Resource/GDP
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
19.013.012.211.59.88.78.48.28.08.28.27.2
32.9
31.529.629.528.724.821.018.816.415.016.317.0
Earmarked Resource/GDP

Ministry
of Finance
74
Capital Market Issuance (R$ billion)
Other
CRI
FIDC
Promissory Notes
FIP
Stocks + CDA
Debentures
Data: R$ billion
*YTD September of each year
Source:CVM
Growing capital market issuances
The volume of financial instruments issued by corporations in the Brazilian capital market has been
growing gradually, amounting to R$ 130 billion in September 2012. Excluding Petrobras issuance in
2010 (R$ 120.25 billion), there has been a gradual growth in the last four years, and it is already 86%
higher than September 2009 level.
0
50
100
150
200
250
0.4
1.9
1.1
0.2
0.5
4.8
5.7
0.8
0.9
3.7
2.5
9.2
7.9
5.4
8.6
7.5
11.1
2.3
3.8
7.8
4.7
3.7
8.2 16.0
21.6
29.4
12.7
16.3
5.7
16.8 17.6
7.3
9.6
7.6
22.7
46.4 34.4 21.6
10.4
FIDCOthersCertificate of Real Estate Receivables Promissory Notes FIP Common Stock Debentures
Sep
2012
Sep
2011
Sep
2010
Sep
2009
Sep
2008
Sep
2007
Sep
2006
Sep
2005
Sep
2004
Sep
2003
Sep
2002
Sep
2001
Sep
2000
Sep
1999
Sep
1998
Sep
1997
Sep
1996
Sep
1995

Ministry
of Finance
75
Real Estate Investment - Public Offers - FIDC, CRI and FII (R$ billion*)
FIDC
CRI
FII
Data: R$ billion
* Current values
Source:CVM
Significant increase in Real Estate Credit
0
5
10
15
20
25
30
3.8
7.8
4.7
4.1
13.1
7.1
FIDC
0.2 0.2 0.2 0.2 0.6 0.8 0.9 3.7 2.5 5.47.99.2
0.1 0.3
0.7
0.2
0.4
0.6
1.0
4.1 13.1
7.1
Sep
2012
Sep
2011
Sep
2010
Sep
2009
Sep
2008
Sep
2007
Sep
2006
Sep
2005
Sep
2004
Sep
2003
Sep
2002
Sep
2001
Sep
2000
FII CRI
0.3 0.3
1.0
2.6
5.0
8.6
7.5
11.1
2.3
3.8
7.8
4.7

Ministry
of Finance
76
Real Estate Investment - Public Offers - LCI (R$ billion*)
Data: R$ billion
* Current values
Source:CVM
Significant increase in Real Estate Credit
-4
-2
0
2
4
6
8
10
12
14
16
12
m
onths
2011
2010
2009
2008
2007

Ministry
of Finance
77
Financial Bills (R$ billion)
Data: R$ billion
* November 30, 2012
Source:Cetip
Long term bank funding
Created in 2010, Financial Bills (FB) are securities issued by financial institutions (IFs), representing
important long-term bank funding. As minimum maturity is 24 months, FB have been allowing the
lengthening of credit operations (for both individuals and corporations). Also, FB are the most appropriate
instrument for matching maturities of assets and liabilities of IFs.
0
50
100
150
200
250
2012*20112010
31.0 148.5 235.0

Ministry
of Finance
78
Basel index (% risk-adjusted assets)
Basel index in Brazil
Lower bound by BACEN
Basel index
Data: % risk-adjusted assets
Resilience in the Brazilian financial market
The main Brazilian banks demonstrate comfortable situation according to Basel Index. Strong regulation
consolidates the resilience of the Brazilian financial system when facing systemic financial crisis such as
those that occurred in the major world economies over the past four years.
0
4
8
12
16
20
Jun
2012
Dec2011
Dec2010
Dec2009
Dec2008
Dec2007
Dec2006
Dec2005
Dec2004
Dec2003
Dec2002
16.7 19.0 18.5 17.4 17.8 17.3 17.7 18.8 16.9 16.3 16.4
Basel index in Brazil Lower bound by BACEN Basel Index

Ministry
of Finance
79
Measures for the development of the capital market
The Development of Capital Markets
Financial Products Objective / Expected Result
Financial Bills
-
tutions (Law 12,249/2010)
Expand credit by increasing long-term
Reducingthecostandsimplifyingtheprocessofissuing
476/2009)
Increase credit to non-financial firms
Receivables - CRI
Extension of investment and infrastructure debentures
Increase the range of instruments avai-
-
-term investment in infrastructure
Reduction to 0% the income tax (Law 11,033/2004)
Reduce the cost and increase the
amount of resources available for real
estate companies
Real Estate Credit Line Reduction to 0% the income tax (Law 11,033/2004)
Reduce the cost and increase the fun-
ding to mortgages

Ministry
of Finance
80
Measures for the development of the capital market
The Development of Capital Markets
Financial Products
Objective / Expected
Result
Investment Debentures
Decrease to 0 percent the rates of Financial
Transaction Tax and Income Tax to foreign in-
vestors (Law 12.431/11)
Encourage long-term Capital
Markets as a way to broaden
the sources of funding for
investments
Infrastructure Debentures
Decrease to 0 percent the rates of Financial
Transaction Tax and Income Tax to foreign in-
vestors,to0percentofincometaxtoindividual
domestic investors and decrease of 10 p.p. of
-
panies (Law 12.431/11)
Develop long-term Capital
Markets as a way to broaden
the sources of funding for
investments

Brazilian Economy
OUTLOOK
Ministry of
Finance
Fiscal
Policy

Ministry
of Finance
82
FiscalPolicy
In 2012 Federal Government used fiscal policy instruments in order to avoid downturns on domestic economy due to
the international crisis.The strategy also means to maintain fiscal fundamentals in a sound situation.
The strong fiscal results allows the Public Sector Net Debt at 35.2 percent of GDP close to the lowest series values.
Also,thecontinuousimprovementinFederalPublicDebtprofile,bothintermsofcompositionandmaturity,hasbeen
reflectedonthedecliningratesofexternalissuances.TheissuanceofGlobal2023bond,inSeptember,resultedonthe
lowest rate of all times for a Brazilian external public debt bond.
Moreover, consistent fiscal situation has still placed Brazil in a privileged position when compared to other G20
countries. It is expected the country should perform one of the greatest primary surpluses in the group, and one of
the lowest nominal deficits.
Fiscalconsolidationfavorsinvestment

Ministry
of Finance
83
FiscalPolicy
Public Sector Fiscal Result (% of GDP)
Public Sector Primary Result
Central Government
Primary Result
Subnational Entities
Primary Result (States
and Municipalities)
State-owned Companies
Primary Result
Public Sector Nominal Result
Data: % of GDP
October 2012
Economic growth with fiscal consolidation
The public sector continues to pursue the fiscal target in line with fiscal responsibility principles, one of
the pillars of Brazilian economic policy. In fact, the fiscal and monetary policy coordination has sought to
mitigate the effects of international crisis on domestic activity. Also, the projected targets will reduce even
more both nominal deficit and public debt.
-6
-5
-4
-3
-2
-1
0
1
2
3
4
0.0
2.6
2.2
2012*2011201020092008200720062005200420032002
3.2
3.3
3.7
3.8
3.2
3.3
3.4
2.0
2.7
3.1
2.2
-4.4
-5.2
-2.9
-3.6 -3.6
-2.8
-2.0
-3.3
-2.5
-2.6
-2.7
3.2 3.3
3.7 3.8
3.2 3.3 3.4
2.0
2.7
3.1
2.2
-4.4
-5.2
-2.9
-3.6 -3.6
-2.8
-2.0
-3.3
-2.5 -2.6 -2.7
Nominal Result Primary Result State-owned Companies
State and Municipalities Central Government
0.1
0.0
0.8
0.6
0.0
0.1
0.6
0.5
1.3
2.1
2.2
0.1
0.2
-0.0
0.1
0.9
1.0
0.8
1.1
1.0
0.3
0.2
0.7
0.8
2.2
2.3
2.7
2.6
2.2
2.2
2.4
0.2
1.6

Ministry
of Finance
84
FiscalPolicy
Primary and Nominal Results (% of GDP)
Primary Result
Nominal Result
Data: % of GDP
* IMF forecasts - Fiscal Monitor
October 2012. For Brazil, Focus
Market Report - Central Bank of
Brazil (November 30, 2012)
Source:CentralBankofBrazilandIMF
Brazil stands out in the international fiscal scenario
Brazilian sound fiscal results stand out in comparison advanced and other emerging countries. For 2012,
Brazil has one of the strongest levels of nominal and primary results, both as a share of GDP.
-10 -8 -6 -4 -2 0 2
Japan
India
USA
UK
France
Canada
Italy
Mexico
Brazil
China
Germany
Russia
-10 -8 -6 -4 -2 0 2 4
Japan
USA
UK
India
Canada
France
China
Mexico
Russia
Germany
Brazil
Italy
Primary Fiscal Result (% of GDP) - 2012 Nominal Result (% of GDP) - 2012
-0.6
-2.2
-3.2
-5.2
-5.6
-6.5
-9.0
2.6
2.6
1.4
1.1
0.2
0.5
-0.4
-1.3
-2.3
-2.4
-2.7
-3.8
-4.7
-8.2
-8.7
-9.5
-10.0

Ministry
of Finance
85
FiscalPolicy
Net Public Debt (% of GDP)
Mexico
Italy
USA
France
Germany
Brazil
Data: % of GDP
* IMF forecasts - Fiscal Monitor
October 2012
Source:IMF
Brazilian public debt falls in adverse international scenario
Even with the adverse international scenario, the country’s net debt as a percentage of GDP keeps on a
decliningperspective,whichhelpstodifferentiatethefiscalsituationofBrazilinrelationtomanyadvanced
and emerging economies.
20
30
40
50
60
70
80
90
100
110
2017*
2016*
2015*
2014*
2013*
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
56.23
39.58
26.56
80.23
89.44
98.68
Italy
France
Germany
MexicoBrazil
USA

Ministry
of Finance
86
FiscalPolicy
Central Government Primary Fiscal Result - Above the Line (% of GDP)
Data: % of GDP
October 2012
** Including social security
benefits, allowance and
unemployment insurance,
assistential benefits (LOAS
and RMV) and“Bolsa
Família”Program
*** Including only investments
classified as GND 4
**** Including the Sovereign
Wealth Fund constitution (2008)
and the capitalization operation
of Petrobras (2010)
Source:NationalTreasurySecretariat/
MinistryofFinance/Senate
Brazil is improving its public expenditure profile
TheCentralGovernmentfiscalresultshavegonethroughsignificantchangessince2002,duetothepositive
impactofjobformalizationontheeconomy,aswellasthefocusonreducinginequalities.Thegrowthinnet
revenues has been directed to income transfers to households and to public investments.
% GDP
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012*
Grossrevenue 21.7 21.0 21.6 22.7 22.9 23.3 23.6 22.8 22.4 23.9 23.9
Transfers to states and municipalities 3.8 3.5 3.5 3.9 3.9 4.0 4.4 3.9 3.7 4.2 4.1
Netrevenue 17.9 17.4 18.1 18.8 19.0 19.3 19.2 18.9 18.7 19.7 19.8
Primaryexpenditure 15.7 15.1 15.6 16.4 17.0 17.1 16.4 17.7 17.4 17.5 18.2
-Payroll 4.8 4.5 4.3 4.3 4.5 4.4 4.3 4.7 4.4 4.3 4.2
- Income transfers to households** 6.8 7.2 7.6 8.1 8.4 8.5 8.1 8.7 8.5 8.6 9.1
- Investments*** 0.8 0.3 0.5 0.5 0.6 0.7 0.9 1.0 1.2 1.0 1.1
1.7 1.6 1.7 1.8 1.7 1.8 1.7 1.9 2.0 2.0 2.1
1.6 1.6 1.5 1.8 1.8 1.8 1.4 1.4 1.4 1.5 1.7
2.1 2.3 2.5 2.5 2.1 2.2 2.8 1.2 1.2 2.3 1.6
0.0 0.0 0.0 0.0 0.0 0.0 -0.5 0.0 0.8 0.0 0.0
Finalprimaryresults(abovetheline) 2.1 2.3 2.5 2.5 2.1 2.2 2.4 1.2 2.1 2.3 1.6
11.1 10.3 10.5 10.8 10.6 10.8 11.1 10.2 10.2 11.1 10.7Netrevenueminustransfers
-Healthandeducation
-Other expenses
Primaryresultwithoutsovereing
wealthfundandonerousassignment
Impactofsocereingwealthfundand
onerousassignment****

Ministry
of Finance
87
FiscalPolicy
Selected Public Expenditures (% of GDP)
Transfers to families
Payroll Expenses and Changes
Data: % of GDP
October 2012
MinistryofFinanceandFederalSenate
Stability of the payroll expenditure and increase in transfers
Despite salary adjustments and the efforts to enhance civil servant workforce, payroll costs have reached
4.2% of GDP in October 2012 on a 12-month basis, below the average for the past 10 years. Meanwhile,
income transfers to households have increased.
4.0
5.5
7.0
8.5
10.0
6.8
7.2
7.6
8.1
8.4
8.5
8.1
8.7
8.5
8.6
9.1
4.8
4.5
4.3 4.3
4.4
4.4
4.3
4.7
4.4
4.3
4.2
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Transfers to families
Payroll Expenses and Charges
4.8
4.5 4.3 4.3 4.4 4.4 4.3
4.7 4.4 4.3 4.2
6.8
7.2
7.6
8.1
8.4 8.5
8.1
8.7 8.5
9.1
8.6

Ministry
of Finance
88
FiscalPolicy
Federal Public Debt Profile** (% of total debt)
Exchange Rate Linked
Floating Rate*
Inflation Linked
Fixed Rate
Data: % of total debt
* Including SELIC,TR and other
** Including domestic and
external debts managed by the
NationalTreasury
MinistryofFinance
Brazil makes good progress in Public Debt composition
The share of floating rate bonds in Federal Public Debt decreased to 23.0%, the second lowest value since
November 1997. On the other hand, the share of fixed rate plus inflation linked bonds, which ensures
greater predictability for the public debt, reached 72.6%, the second highest historical level.
0
10
20
30
40
50
60
70
80
90
100
O
ct2012
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Exchange Rate Floating Rate* Inflation Linked Fixed Rate
4.4
23.0
33.8
38.7
40.2
48.3
5.0
6.5

Ministry
of Finance
89
FiscalPolicy
Gross General Government Debt and Net Public Sector Debt (% of GDP)
Gross General
Government Debt*
Net Public Sector Debt**
Data: % of GDP
* Methodology since 2008
** Excluding assets and liabilities
of Petrobras and Eletrobras
Public debt drops consistently
Fiscal policy in Brazil has been able to keep the Public Debt-GDP ratio in a downward trend. For instance,
Gross General Government Debt went from 63.1 percent in October 2009 to 59.2 percent in October 2012,
whereasNetPublicSectorDebtwentfrom42.9to35.2percentinthesameperiod,thesecondlowestvalue
in the series since its first release in 2001.
30
35
40
45
50
55
60
65
46.7
57.1
35.2
59.2
42.9
63.1
Data de elaboração:
23-11-12
Nome do Arquivo:
DLSP_Divida
Bruta_do_Governo
Central--PT--23-11-
12_PF.xls
copiar célula acima
e colar valores na célula
abaixo
Net Public Sector Debt **
Gross General Government Debt**
O
ct2012
Jul2012
Apr2012
Jan
2012
O
ct2011
Jul2011
Apr2011
Jan
2011
O
ct2010
Jul2010
Apr2010
Jan
2010
O
ct2009
Jul2009
Apr2009
Jan
2009
O
ct2008
Jul2008
Apr2008
Jan
2008
O
ct2007
Jul2007
Apr2007
Jan
2007

Ministry
of Finance
90
FiscalPolicy
Average Maturity of Domestic Federal Public Debt (years)
Data: years
MinistryofFinance
The lengthening of Federal Public Debt average maturity
The average maturity of the Domestic Federal Public Debt has been increasing constantly, reaching 3.9
years.The same applies to the outstanding Federal Public Debt, with average maturity rising to 4.0 years.
The lengthening of debt average maturity contributes to reducing the risk of refinancing debt in Brazil.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
O
ct2012
O
ct2011
O
ct2010
O
ct2009
O
ct2008
O
ct2007
O
ct2006
O
ct2005
O
ct2004
O
ct2003
O
ct2002
O
ct2001
O
ct2000
Stock
3.93.53.43.43.33.12.52.32.42.62.72.92.4

Ministry
of Finance
91
FiscalPolicy
Non-Resident Share in Federal Public Debt (% of total DFPD*)
Data: % of total DFPD*
* Domestic Federal Public Debt
MinistryofFinance
Increasing number of non-resident investors in Brazilian public debt
TheBraziliandomesticpublicbondshaveremainedattractiveforforeigners,reachingthehighestlevelofthe
series.Typical non-resident investors differ from domestic ones as they demand more fixed rate bonds and
have more appetite for longer maturities, which contributes to the improvement of domestic debt profile.
0
2
4
6
8
10
12
14
O
ct2012
Sep
2012
Jul2012
M
ay
2012
M
ar2012
Jan
2012
Nov
2011
Sep
2011
Jul2011
M
ay
2011
M
ar2011
Jan
2011
Nov
2010
Sep
2010
Jul2010
M
ay
2010
M
ar2010
Jan
2010
Nov
2009
Sep
2009
Jul2009
M
ay
2009
M
ar2009
Jan
2009
Nov
2008
Sep
2008
Jul2008
M
ay
2008
M
ar2008
Jan
2008
Nov
2007
Sep
2007
Jul2007
M
ay
2007
M
ar2007
13.8IOF: 1.5% on
Foreign Investment
Inflow Tax
IOF: 0% on
Foreign Investment
Inflow Tax
IOF: 2.0% on
Foreign Investment
Inflow Tax
IOF: 6.0% on
Foreign Investment
Inflow Tax
Non-Resident Share

Ministry
of Finance
92
FiscalPolicy
Yields of 10-year Brazilian and USA bonds (% per annum)
Brazilian Sovereign Bonds
USTreasury Bonds
Data: % per annum
* Measured by the differential
of yields from 10-year Brazilian
bonds denominated in USD and
yields from USTreasury bonds
(same maturity), traded on
the secondary market on the
same date
MinistryofFinance
Increase of investors confidence for sovereign bonds
Commitment to fiscal responsability throughout the years combined with economic growth have
contributed to the reduction of credit risk* in Brazil and reinforced the appealing of Brazilian sovereign
bonds. Brazilian National Treasury issued, on September 5, the Global 2023 at a yield of 2.686% per year,
the lowest rate ever for a Brazilian Global bond issuance.
0
3
6
9
12
15 14,6
12,6
10,6
10,8
8,2
7,9 7,7 7,8
6,2
5,9
5,3
6,1 5,8
2,7
4,8 5,0
4,5 4,2
3,4
4,2
6,2
4,9
3,3
4,5 4,4 4,0
4,6 4,7 4,7
3,8
2,5
3,3 3,6 3,8
3,0 3,1
2,0
1,6
Sep
2012
Jan
2012
Jul2011
Jul2010
Apr2010
Dec2009
M
ay
2009
Jan
2009
M
ay
2008
Apr2007
Nov
2006
Nov
2005
Jun
2005
Feb
2005
Dec2004
Jul2004
Jun
2003
Jan
2002
O
ct1999

Brazilian Economy
OUTLOOK
Ministry of
Finance
External
Sector

Ministry
of Finance
94
ExternalSector
In 2012, the Brazilian trade balance has been influenced by external factors, resulting in decreases in exports and
imports,inthe12monthsaccumulateduptoOctober2012.Itisduetoaweakerglobaldemandandnewbureaucratic
procedures faced by Brazilian exporters. In fact, trade barriers imposed by Argentina, one of our main trade partners,
haveresultedindelaysintheimportapprovalprocess.However,Brazilshowsarelevantexportmarketdiversification
quality, which has mitigated such difficulties.
Even under this adverse scenario in 2012, Brazil’s low external vulnerability lies in its excellent macro fundamentals.
As opposed to previous crisis episodes, the volume of foreign reserves has considerably exceeded external debt and
the current account deficit remains around 2.3% of GDP, being entirely financed by foreign direct investment. As a
matter of fact, Brazil has been one of the main receptors of FDI in the world.
ExternalfactorsinfluencingtheBraziliantradebalance

Ministry
of Finance
95
ExternalSector
Trade Balance* (US$ billion)
Exports
Imports
Balance
Data: US$ billion
*1994-2011:yearlyaccumulated,
2012: on a 12-month basis up to
October 2012
Source:MDIC
Weak global demand affects Brazilian foreign trade
The Brazilian trade balance has been negatively affected by weak global demand and red tape problems
abroad.InOctober2012,Brazil´stradesurplusamountedUS$21.8billion,duetolowerexports(US$246.3
billion) and imports (US$ 224.5 billion).
0
50
100
150
200
250
300
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
5
10
15
20
25
30
35
40
45
50
Exports
Imports
Balance
21.8
33.1
50.0
53.3
59.7
57.7
49.2
55.8
55.6
47.2
48.3
62.8
73.6
91.4
120.6
173.1
127.7
181.8
226.2
224.5
43.5
46.5
47.7
53.0
51.1
48.0
55.1
58.2
60.4
73.1
96.5
118.3
137.8
160.6
197.9
153.0
201.9
256.0
246.3

Ministry
of Finance
96
ExternalSector
Brazilian Exports: Major Partners* (US$ million)
2011
2012
Data: US$ million FOB
* Comparisons from January
to October 2012 and 2011
(1) Including Puerto Rico (2)
IncludingVenezuela from
August 2012
Source:MDIC
Export performance in 2012
Brazilian exports have reduced slightly in comparison to 2011. Sales to major trading partners declined,
except those to the US. From January to October 2012, compared with the same period in 2011, exports
decreased to China, Argentina and the European Union. On the other hand, sales to the US grew about
10.0% in the period analyzed.
-2.5%
2011 2012
0
10
20
30
40
50
60
70
80
62.4
35.2
42
23.3
15.1
41
22.8
9.9
9.5
3.7
64
37.1
46.9
26.7
18.9
44.3
20.6
9.9
10.3
4.7
Eastern
Europe
M
iddle
East
Africa
USA(1)
EU
Argentina**
M
ercosur*
Latin
Am
erica
and
the
Caribbean
China
Asia
-5.2%
-10.4%
-12.8%
-20%
-7.5%
10.6%
0% -7%
-20.2%

Ministry
of Finance
97
ExternalSector
Brazilian Exports to Argentina (%YoY)
Data: % change from
preceding year
Source:MDIC
Decline in exports to Argentina
In February 2012, Argentina imposed that companies had to fill out a Sworn Affidavit of Intention to
Import(DJAI)withtheArgentineRevenueandCustomsAuthority,priortocompletingapurchaseorderfor
importedgoods.Thismeantmoredelayintheimportapprovalprocessand,asaresult,Brazilianexportsto
Argentina have fallen into negative territory since March 2012.
-40
-30
-20
-10
0
10
20
30
40
50
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
February 1: Beginning of DJAI
42.7
39.8
24.3
34.7
31.4
32.8
25.5
27.8
18.0
20.5
16.2
2.7
5.0
-14.3
-18.8
-23.2
-15.9
-34.0
-27.0
-24.3
-32.9
-18.5

Ministry
of Finance
98
ExternalSector
Brazil: LargestTrading Partners (% of total exports)
1990
1998
2004
2012*
Data: % share of total exports
*YTD October 2012
**Venezuela not included
Source:MDIC
Greater export diversification
Market diversification has been one of the strategies to increase Brazilian exports.The share of exports to
China grew in importance in recent years, from 1.2% in 1990 to 17.4% in year-to-date. Share of exports to
Mercosur** partners also increased, from 4.2% in 1990 to 9.4% in 2012.
0
5
10
15
20
25
30
35
1.817.4 11.2 20.3 9.45.6 20.8 25.5 9.21.8 19.1 29.8 17.429.2 33.3 4.21.2
1990
1998
2008
2012
MercosurEuropean UnionUSAChina

Ministry
of Finance
99
ExternalSector
Brazilian Exports: Manufactured Goods* (% of total manufactured exports)
Argentina
United States
China
European Union
Data: % share of total
manufactured exports
*YTD October 2012
Source:MDIC
Main destinations of Brazilian manufactured exports
Manufactured exports to Argentina have grown in importance since 2002, while sales of manufactured
sales to the US have decreased over the last years. Since 2010, however, there has been a recovery in sales
to the USA and a drop to our main Mercosur partner. Nowadays, the EU is the main destination of Brazilian
manufactured exports, purchasing about 20% of these products.
0
5
10
15
20
25
30
35
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
19.6
18.3
14.8
2.7
European Union
Argentina
China
USA

Ministry
of Finance
100
ExternalSector
Reduction in Exports* to the Eurozone: GDP Impact (pp)
Data: percentage points
* Between the first half of 2011
and first half of 2012
Source:OECD
Brazil: the lowest impact on its exports due to the crisis
OECDanalysisshowsthat,amongemergingcountries,Brazilhasexperiencedthelowestimpactofreduction
(-0.2 p.p) in exports to the Eurozone, comparing the first half of 2012 with the same period in 2011. South
Africa, on the other hand, has experienced a reduction four times higher.
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
S. AfricaRussiaIndiaChinaIndonesiaBrazil
-0.8
-0.7
-0.5-0.5
-0.3
-0.2

Ministry
of Finance
101
ExternalSector
Current Account Balance* (US$ billion and % of GDP)
Balance (US$ billion)
Current Account (% of GDP)
Data: US$ billion and % of GDP
* 2012: on a 12-month basis up
to October 2012
Current account deficit relatively stable
Current account deficit in Brazil, which totaled US$ 50 billion in 2011, reached US$ 52.2 billion in the 12
monthsthroughOctober2012.Thelowervolumeofprofitsanddividendsremittances,aresultofthecurrency
devaluation,hasbeenthemajorfactorresponsibleforthestabilityofthedeficittoGDPratioat2.3%.
-60
-50
-40
-30
-20
-10
0
10
20
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
-10
-8
-6
-4
-2
0
2
4
Current Account Balance (US$ billion) Current Account (% GDP)
-7.6
-23.2
-24.2
-25.3
-33.4
-30.5
-23.5
1.6
13.6
14.0
11.7
4.2
-52.2
-52.5
-47.3
-24.3
-28.2
-2.3-2.1-2.2
-1.5-1.7
0.1
1.31.61.8
0.8
-1.5
-4.2
-3.8
-4.3-4.0
-3.5
-2.8

Ministry
of Finance
102
ExternalSector
Foreign Direct Investment (US$ billion)
Data: US$ billion
* Focus Market Report -
Central Bank of Brazil
(November 30, 2012)
FDI might reach more than US$ 60 bi in 2012
ThevolumeofFDIflowsinBrazilremainshigh,reachingUS$55.3billionfromJanuarytoOctober2012.This
pattern led the Central Bank to raise its projection of foreign investments in the country from US$55 billion
toUS$60billionin2012.Thisisthesameprojectionofmarketanalystsfor2012and2013*,butfigurescan
be even higher than expected.
0
10
20
30
40
50
60
70
80
2013*
2012*
2011
2010
2009
2008
2007
2006
2005
2004
18.1 15.1 18.8 34.6 45.1 25.9 48.5 66.7 60.0 60.0
FDI total

Ministry
of Finance
103
ExternalSector
Foreign Direct Investment, Portfolio Foreign Investment and Current Account Balance (% of GDP)
Foreign Direct Investment
Foreign Portfolio Investment
Current Account Balance
Data: % of GDP
October 2012
FDI more than enough to finance current account deficit
The volume of FDI flows (2.9% of GDP on a 12-month basis up to October) has been more than sufficient
to finance the Brazilian current account deficit of 2.3% of GDP. As for Foreign Portfolio Investment, it has
remained stable, at around 0.6% of GDP, since the beginning of 2012.
0.6
-2.3
2.9
Current Account Balance
Foreign Portfolio Investment
Foreign Direct Investment
-3
-2
-1
0
1
2
3
4
O
ct2012
Sep
2012
Jun
2012
M
ar2012
Dec2011
Sep
2011
Jun
2011
M
ar2011
Dec2010
Sep
2010
Jun
2010
M
ar2010
Dec2009
Sep
2009
Jun
2009
M
ar2009
Dec2008
Sep
2008

Ministry
of Finance
104
ExternalSector
Foreign Liability Composition* (% of total participation)
Other Liabilities
Fixed Income
Stocks
FDI
Data: % of total participation
* Preliminary dataYTD
October 2012
FDI accounts for just about half of foreign liabilities
Despite the crisis, the percentage share of FDI in total external liabilities increased to 46.4% in October
2012.Investmentsinthelocalfixedincomemarkethavealsorisenandoffsetthedeclineinforeigninflows
to the Brazilian stock market.
Other Liabilities Fixed Income Stocks FDI
0
10
20
30
40
50
60
70
80
90
100
26.4 30.6 26.5 22.4 14.2 13.4 11.0 16.8 10.4 10.5 13.1 13.2
30.9
32.1
27.8
24.1
21.5 18.0 15.8
19.9
17.2 15.0 16.4 17.8
9.9
7.9
13.1
17.3
25.1
30.7
39.6
21.6
35.0 29.4
24.7 22.6
29,4
26.4 30.6 26.5 22.4 14.2 13.4 11.0 16.8 10.4 10.5 13.1 13.2
30.9
32.1
27.8 24.1
21.5 18.0 15.8
19.9
17.2 15.0 16.4 17.8
9.9
7.9
13.1
17.3
25.1 30.7
39.6
21.6
35.0 29.4 24.7 22.6
32.8 32.7 36.1 39.2 37.9
33.6
41.6
37.3
45.0 45.8 46.4
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001

Ministry
of Finance
105
ExternalSector
Global FDI inflows: top 10 host economies (US$ billion)
2011 (1st half)
2012 (1st half)
Data: US$ billion
* Global InvestmentTrends
Monitor n. 10
Source:UNCTAD
Brazil among top FDI destinations
Emerging economies continue to absorb more than half of global FDI flows. Comparing the first half of
2012, with the same period in 2011, FDI received by Latin America and the Caribbean countries rose by
8.0%. Brazil appears as the world’s 5th largest FDI host during the same period.
China
USA
Hong Kong, China
France
UK
Brazil
Singapore
Canada
Australia
Belgium
2012 2011
21.4
23.5
24.5
27.4
29.7
30.8
34.7
40.8
57.4
59.1
34.4
20.2
30.8
27.9
32.5
31.2
9.8
55.2
94.4
60.9

Ministry
of Finance
106
ExternalSector
BDO Index of Global Investment Opportunity (index)
Data: index
* BDO Global Market Opportunity
Index: the arithmetic average
of 100 is the average intention
of global expansion from data
collected in interviews across
countries and regions
Source:BDOAccountancyNetwork
Brazil is one of the best places to invest in
Over the last years, Brazil has seen a boom in productive capital flows, with companies from across the
world investing in or planning to enter the Brazilian market. The country’s position has changed from
sixth place, in 2011, to third, in 2012. China remains the number one investment destination, for the
third year running.
0
60
120
180
240
300
Australia
UK
Russia
Germ
any
India
Brazil
USA
China
251.0 212.0 198.0 158.0 147.0 108.0 104.0 77.0

Ministry
of Finance
107
ExternalSector
International Reserves (US$ billion)
IMF loans - annual
Total International reserves
liquidity concept - annual
Data: US$ billion
* Up to November 30, 2012
Foreign reserves reduce external vulnerability
International reserves, which amounted to US$ 378.6 billion in November 2012, continue to be higher
than total foreign debt. As so, the country remains a strong net external creditor. International reserve
accumulationisoneofthepillarsofBrazilianeconomicpolicyforexternalvulnerabilityreduction,especially
in a crisis environment.
0
50
100
150
200
250
300
350
400
0.0 0.0
0.0
0.0
0.0
0.0
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
IMF loans - annual
Total international reserves liquidity Concept - Annual
20.8
28.3 24.9
17.0 21.0 28.0 53.8 85.8 180.3 193.8 238.5 288.6 352.0 378.6

Ministry
of Finance
108
ExternalSector
ExternalVulnerability Indicators (% of GDP)
Total External Debt
International Reserves
Current Account
Data: % of GDP
* October 2012
Indicators point to low external vulnerability
Brazil has maintained its low external vulnerability conditions throughout 2012. Unlike previous crises
episodes,thevolumeofforeignreserveshasexceededexternaldebtconsiderably.Furthermore,ourcurrent
account deficit remains at a level easily financed by long-term investments.
-10
0
10
20
30
40
50
201220081998198719821974
Current Account (%GDP) International Reserves (%GDP) Total External Debt (%GDP)
First oil
shock impact
External
Debt Crisis
External Debt
Moratorium
Before flexible
exchange
rate regime
Present
situation
(october/12)
World
Financial Crisis
(subprime)
4.8
1.5
2.6
5.3
11.7
16.4
18.1
31.5
26.5
12.0
13.4
-6.8
-6.0
-0.5
-4.0
-1.7
-2.3
42.9

Ministry
of Finance
109
ExternalSector
Real Effective Exchange Rate* (index)
Yuan: China
Real: Brazil
Dollar: U.S.
Euro: Eurozone
Data: index
*Deflator: CPI index. Positive
changes means appreciation
and negative changes
means depreciation
Source:BIS
More competitive Brazilian real exchange rate
Despite the sizeable liquidity recently injected by developed economies, the Brazilian Real has not
appreciated. Measures adopted by the Government have contributed to preventing the loss of country’s
competitiveness in a scenario of currency war provoked by advanced economies.
85
90
95
100
105
110
115
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
Dec2010
Nov
2010
O
ct2010
Sep
2010
Aug
2010
Jul2010
Jun
2010
M
ay
2010
Apr2010
M
ar2010
Feb
2010
Jan
2010
97.8
90.2
89.6
107.6
Dollar: USA Euro: Eurozone Yuan: China Real: Brasil

Ministry
of Finance
110
ExternalSector
Nominal Exchange Rate (RS/US$)
Data: R$/US$
Winning the currency war: Brazilian Real in a more competitive level
The Brazilian Government has dealt with the so-called currency war by implementing macroprudential
policiestomanageshort-termforeigncapitalinflows.Thefinancialoperationstax(IOF),chargedonshort-
termforeignloans,contributedtotheincreaseintheaverageexchangerate(R$/US$)fromR$1.72in2011
to current values around R$ 2.10 at the beginning of December 2012.
2.11
1.5
1.6
1.7
1.8
1.9
2.0
2.1
Dec2012
Nov
2012
O
ct2012
Sep
2012
Aug
2012
Jul2012
Jun
2012
M
ay
2012
Apr2012
M
ar2012
Feb
2012
Jan
2012
Dec2011
Nov
2011
O
ct2011
Sep
2011
Aug
2011
Jul2011
Jun
2011
M
ay
2011
Apr2011
M
ar2011
Feb
2011
Jan
2011
2011
2nd half
Average:
R$ 1.72
2012
1st half
Average:
R$ 1.87
2012
2nd half
Average:
R$ 2.04
2011
1st half
Average:
R$ 1.63
Average
Exchange Rate - Free- US Dollar (purchase) - u.m.c./US$

Brazilian Economy
OUTLOOK
Ministry of
Finance
International
Overview

Ministry
of Finance
112
InternationalOverview
The2008financialturmoilhasnotyetcometoanend,astheworldisstillwaitingtoseeadvancedeconomiesaddress
important financial and political problems. In the United States, the Federal Reserve has become the main source of
economic stimulus, having implemented the third round of quantitative easing, without satisfactory results for the
US, but with negative consequences for emerging economies. From the fiscal point of view, the debate has dragged
onsince2011,resultingintheso-called“FiscalCliff”,whichisaseriesofbudgetcutsandtaxincreasestogointoeffect
atthebeginningof2013. Ifthisfiscaltighteningfullytakesplacethentheeconomywouldsufferaseriousrecession,
negatively impacting the global economy. Thus, the US politicians must make a deal on the budget deficit, in order
to avoid a recession.
In Europe, the crisis still persists in countries like Greece, Portugal and Spain, with severe economic and social
consequences. The crisis is also starting to affect more solid economies, such as Germany. Therefore, it is important
that Euro zone countries come up with rapid and durable solutions, specially in terms of banking supervision and
fiscal consolidation, so that economic growth picks up in the region.
Advanced economies still face major challenges

Ministry
of Finance
113
2013
2014
Data: % change from
preceding year
*WEO October 2012
Source:IMF
2013-2014 GDP Growth: more dynamism of emerging economies
Canada
Brazil
Argentina
South
Africa
Egypt
Saudi
Arabia
India
Russia
Japan
Australia
South
Korea
Indonesia
China
Turkey
United
Kingdom
Mexico
United
States
2.42.0
2.92.1
3.53.5
4.24.0
3.83.1
3.93.0
4.53.0
2.21.1
4.03.5
3.84.2 6.46.0
8.58.2
3.93.8
1.11.2
4.03.6
6.56.3
3.23.0
1,20,2
Euro
Zone
Spain Italy
France
0.4 1.1
-1.3 1.0 -0.7 0.5
Germany
1.40.9

Ministry
of Finance
114
2013
2014
Data: % change from
preceding year
*WEO October 2012
Source:IMFandBrazilianGovernment
2013-2014: inflation forecasts
2014
2013
Saudi
Arabia
Brazil*
Russia
Argentina
India
China
Indonesia
South
Korea
Australia
JapanUSA
South Africa
Mexico
Canada
Eurozone
4.9
9.7
3.5
5.2
4.6
9.6
6.6
2.7
5.1
3.0
2.6
-0.2
1.8
2.0 1.6
4.8
5.0
4.9
8.3
6.5
2.1
3.0
3.0
4.9
2.3
9.8
3.0
2.0
2.0
1.4

Ministry
of Finance
115
2013
2014
Data: % of GDP
*WEO October 2012
Source:IMFandCentralBankofBrazil
2013-2014: current account balance forecasts
2013
2014
Saudi
Arabia
Brazil
Russia
Argentina
India
China
Indonesia
South
Korea
Australia
JapanUnited States
South Africa
Mexico
Canada
Eurozone
-0.1
-1.1
-5.8
22.7
-3.3
3.8
1.7
-2.4
2.5
-5.5
2.3
-3.1
-3.7
1.3
-2.8
z
-6.1
19.1
2.8
2.3
2.5
1.4
2.8
-2.3
6.1
-0.7
-1.0
-3.1
-3.7
1.1
-3.3

Ministry
of Finance
116
Deviation of Actual and Potential GDP Growth Rates* (pp)
Very strong (<-2.5)
Strong (between
-2.5 and -2.0)
Moderated (between
-2.0 and -1.5)
Limited (between
-1.5 and 0.0)
Data: percentage point
* IMF calculations
Source:IMF
Brazil will be the least affected in the case of crisis worsening
The IMF analyzed the effects of an intensification of the European crisis, taking into account factors such as
a sharp drop in global demand and commodity prices, among others. Under this scenario, Brazil would be
among the least affected economies by the financial crisis in Europe.
Very strong (<-2,5) Moderated (between -2,0 and -1,5)

Ministry
of Finance
117
GDP Growth: Advanced and Emerging Economies (%YoY)
Data: % change from
preceding year
*WEO October 2012
Source:IMF
Global Economy: slow recovery in the short-term scenario
Due to the current financial crisis, the global economy will not be able to fully recover in all regions at the
same time. In the next two years, the prospects for economic growth in Latin America, Emerging Asia and
Africa are much more positive than in advanced economies, such as in Europe and Japan.
-10
-5
0
5
10
15 2014*
2013*
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-10
-5
0
5
10
15
2014*
2013*
2012*
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
7.5
4.1
5.5
2012 2013
Emerging Asia 6.7 7.2
Latin America 3.2 3.9
Sub Saharan Africa 5.0 5.7
2014
2012 2013
United States 2.2 2.1
Euro Area -0.4 0.2
Japan 2.2 1.2
2014
2.9
1.2
1.1

Ministry
of Finance
118
Eurozone GDP Growth (% QoQ)
Data: % change from
preceding quarter
Source:BCE
Recession in the Eurozone
Since the fourth quarter of 2011, quarter-over-quarter economic growth in the Eurozone has been zero or
below. In third quarter of 2012, the Eurozone economy shrank for a second consecutive quarter, falling by
0.1% over the previous one. European leaders are still struggling to find a consistent solution in order to
put the region back on track.
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
3
Q
2012
2
Q
2012
1
Q
2012
4
Q
2011
3
Q
2011
2
Q
2011
1
Q
2011
4
Q
2010
3
Q
2010
2
Q
2010
1
Q
2010
0.5
1.0
0.4
0.3
0.6
0.2
0.1
-0.3
0.0
-0.2
-0.1

Ministry
of Finance
119
G20 and Europe: Gross Public Debt (% of GDP)
G20 countries
G20 European countries
Eurozone members
Data: % of GDP
*WEO October 2012 forecasts
Source:IMF
Public debt in Europe is still a concern
The current economic crisis is deeply related to the high level of debt over GDP in countries such as Italy,
Ireland and Portugal. The projections for 2012 show that these three countries have debt-to-GDP ratio
above 110%. The Greek situation is even worse, as its debt-to-GDP ratio is 170%. The US and Japan debt
levels have increased as well.
2007 2012*
Argentina 67,09 45,22
Australia 9,71 27,07
Brazil 65,19 64,08
Canada 66,52 87,52
China 19,59 22,16
India 75,46 67,59
Indonésia 35,05 23,90
Japan 183,01 236,56
Mexico 37,56 43,08
Russia 8,51 11,03
South Africa 28,29 41,25
South Korea 30,66 33,46
Turkey 39,92 37,70
UK 67,16 107,18
USA 66,43 93,62
2007 2012*
France 64,22 89,97
Germany 65,36 83,04
Italy 103,08 126,33
UK 43,71 88,68
Belgium 84,01 99,03
Greece 107,45 170,73
Ireland 24,99 117,74
Netherlands 45,30 68,20
Poland 44,99 55,10
Portugal 68,27 119,07
Spain 36,30 90,69
Sweden 39,73 37,15

Ministry
of Finance
120
ManufacturingValue Added Growth (%YoY)
year (US$ at 2000 prices)
Source:UNIDO-UnitedNations
IndustrialDevelopmentOrganization
Industrial production still weak in 2012 worldwide
Global industrial production growth has remained weak in 2012, due to the uncertainties related to the
international financial crisis. Estimates show that the value added of the world manufacturing should
grow by 3.0% in 2012. But industrial production in emerging economies will expand much more than in
advanced countries: 4.5% and 1.4%, respectively.
Sector 2011 Expectationsfor 2012
World 2.9 3.0
IndustrializedCountries 0.4 1.4
North America 0.4 1.7
East Asia -1.6 4.1
Europe 1.8 -1.7
DevelopingCountries 5.4 4.5
China 10.6 9.0
RecentlyIndustrializedcountries 5.7 4.4
Other developing countries 3.7 4.4

Ministry
of Finance
121
Economic Climate Index* (points)
Oct 2012
Jul 2012
Data: points
* ECI oscillates between 1 and 9
points and refers to the average
net optimists minus pessimists
for qualitative questions
Source:IFO/FGV
Brazil overcomes other BRICS countries in economic climate
The Economic Climate Index (ECI) seeks to capture the sense of experts regarding the current economic
situation and expectations for the next six months. According to the latest ratings released by Getulio
Vargas Foundation (FGV), as of October 2012, the Brazilian ICE grew to 6.1 points, against 5.2 registered in
the previous quarter.This score is higher than in other BRICS, as well as in advanced economies.
0
1
2
3
4
5
6
7
Brazil
India
United
Kingdom
Germ
any
United
States
China
Russia
European
Union
Japan
France
South
Africa
Oct 2012
Jul 2012
2.9
3.3
3.6
4.1
4.3
4.7
4.7
4.8
4.8
5.4
6.1
4.1
3.8
4.2
4.4
4.5
5.0
4.6
5.4
4.7
5.0
5.2

Ministry
of Finance
122
OECD Leading Indicator (points)
China
Brazil
USA
Euro
Data: points
*The horizontal line at 100
represents the long-term trend
of economic activity
Source:OCDE
OECD leading indicator shows Brazilian recovery
The OECD leading indicator, which anticipates in six months the inflection of long-term trend of economic
activity, continues to point to weak growth prospects in many major economies of the world, especially in
the Eurozone. But there are already signs of improvement in countries like China and the USThe prospects
for Brazil point to a recovery in economic growth.
BrazilChina EuroUSA
92
94
96
98
100
102
104 2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
92
94
96
98
100
102
104
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002

Ministry
of Finance
123
Unemployment Rate*: Brazil, Eurozone and the US (%, sa and nsa)
US (sa)
Eurozone (sa)
Brazil (nsa)
Data: %, Brazil data: not
seasonally adjusted, United
States and Eurozone data:
seasonally adjusted
* Data up to October 2012, aside
from Eurozone (September 2012)
Source:Bloomberg
Unemployment rates dynamics in the US, Europe and Brazil
Unemployment rates have presented different dynamics in Brazil, US and Eurozone. In the U.S, the
unemployment rate has been declining, but it is still above its historical average. In Europe, the poor
performance of the labor market is a major concern. On the other hand, unemployment has fallen
consistently in Brazil, reaching 5.3% in October 2012.
7.9
5.3
11.6
4
5
6
7
8
9
10
11
12
O
ct2012
Jul2012
Apr2012
Jan
2007
O
ct2006
Jul2006
Apr2006
Jan
2006
O
ct2005
Jul2005
Apr2005
Jan
2005
O
ct2009
Jul2009
Apr2009
Jan
2009
O
ct2008
Jul2008
Apr2008
Jan
2008
O
ct2007
Jul2007
Apr2007
Jan
2007
O
ct2006
Jul2006
Apr2006
Jan
2006
O
ct2005
Jul2005
Apr2005
Jan
2005
Brazil
Eurozone
United States

Ministry
of Finance
124
CRB Commodity Prices* (index-number)
CRB Spot
CRB Food
CRB Metals
Data: index-number
(Dec 2005 = 100)
* On November 15, 2012
Source:Bloomberg
Food commodities influenced by weather-related issues in 2012
In the 12 months ended in November 2012, commodity prices showed some stability. For instance, the
CRBFoodIndexfell0.2%andMetalsdecreasedby0.1%,comparedtotheaveragepriceofNovember2011.
However,thepricesofagriculturalcommoditiesroseconsiderablybetweenJuneandSeptember2012,due
to adverse weather conditions in the US. Since then, prices have started to decrease.
50
90
130
170
210
250
Nov
2012
Sep
2012
Jun
2012
M
ar2012
Dec2011
Sep
2011
Jun
2011
M
ar2011
Dec2010
Sep
2010
Jun
2010
M
ar2010
Dec2009
Sep
2009
Jun
2009
M
ar2009
Dec2008
Sep
2008
Jun
2008
M
ar2008
Dec2007
Sep
2007
Jun
2007
M
ar2007
Dec2006
Sep
2006
Jun
2006
M
ar2006
Dec2005
196.23
181.62
158.10
CRB Metals CRB Food CRB Spot

Ministry
of Finance
125
Brent Oil Price (Barrel in US$)
Data: barrel in US$
Source:Bloomberg
Oil prices at 2011 level
Oil price’s upward trend, which started after the 2008-2009 financial turmoil, lasted until the beginning of
2011. After dropping in the middle of 2012, oil prices recovered again, reaching the 2011 level.
0
20
40
60
80
100
120
140
Nov
2012
Sep
2012
Jul2012
M
ay
2012
M
ar2012
Jan
2012
Nov
2011
Sep
2011
Jul2011
M
ay
2011
M
ar2011
Jan
2011
Nov
2010
Sep
2010
Jul2010
M
ay
2010
M
ar2010
Jan
2010
Nov
2009
Sep
2009
Jul2009
M
ay
2009
M
ar2009
Jan
2009
108.2

Ministry
of Finance
126
United States: Leading and Coincident Economic Indicators (index-number)
Leading Economic
Indicator (LEI)
Coincident Economic
Indicator (CEI)
Data: index-number
(2004 = 100)
Source:TheConferenceBoard
Leading indicators show slow rebound pace in US economy
Despite the slow pace of recovery, the US economy is showing some positive signs. The Conference Board
Leading Economic Index is continuing to improve and it is well above 2009 levels, when economic activity
shrank considerably. The Coincident Economic Index, which measures current economic conditions, has
increased despite a slight drop in October 2012.
80
85
90
95
100
105
110
O
ct2012
Sep
2012
Jun
2012
Jan
2012
Jun
2011
Jan
2011
Jun
2010
Jan
2010
Jun
2009
Jan
2009
Jun
2008
Jan
2008
Jun
2007
Jan
2007
Jun
2006
Jan
2006
Jun
2005
Jan
2005
Jun
2004
Jan
2004
Jun
2003
Jan
2003
Jun
2002
Jan
2002
Jun
2001
Jan
2001
Jun
2000
Jan
2000
Jun
1999
Jan
1999
104.8
96
Coincident Economic Indicator (CEI)
Leading Economic Indicator (LEI)

Ministry
of Finance
127
United States: Sales of Existing Homes and Housing Starts (millions, sa)
Sales of Existing Homes
Housing Starts
Data: millions,
seasonally adjusted
Source:Bloomberg
US housing market: timid signs of recovery
The US housing market is steadily improving with consistent increases in sales and new constructions.
Privately-owned housing starts reached 894,000 units in October 2012. It is more than 40% above the
October 2011 rate of 630,000 units. Total existing-home sales rose 10.9% in October 2012, from October
2011 (a total of 4.79 million units). This is the 16th consecutive month of year-over-year increases in
existing-home sales in the US.
0
500
1,000
1,500
2,000
2,500
O
ct2012
Jul2012
Apr2012
Jan
2012
O
ct2011
Jul2011
Apr2011
Jan
2011
O
ct2010
Jul2010
Apr2010
Jan
2010
O
ct2009
Jul2009
Apr2009
Jan
2009
O
ct2008
Jul2008
Apr2008
Jan
2008
O
ct2007
Jul2007
Apr2007
Jan
2007
O
ct2006
Jul2006
Apr2006
Jan
2006
Housing Starts
Sales of Existing Homes
4.79
894
3
4
5
6
7
8

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