November 2012

G L O B A L C I T I E S I N I T I A T I V E

São Paulo, Brazil

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This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.

The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of which are accordingly subject to change. J.P. Morgan’s opinions and estimates constitute J.P. Morgan’s judgment and should be regarded as indicative, preliminary and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other entity. J.P. Morgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a transaction. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or transactions involving an actual or potential change of control, which may have significant valuation and other effects.

Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons, without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by J.P. Morgan. J.P. Morgan's policies on data privacy can be found at http://www.jpmorgan.com/pages/privacy.

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IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not prov ide tax advice. Accordingly, any discussion of U.S . tax matters included herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone not affiliated with JPM organ Chase & Co. of any of the matters addressed h erein or for the purpose of avoiding U.S. tax-related penalties.

J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc, J.P. Morgan Securities Ltd. and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in EMEA and Asia-Pacific, and lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, N.A. J.P. Morgan deal team members may be employees of any of the foregoing entities.

This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services.

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Agenda

Page

Latin America 1

Brazil economy 6Brazil economy 6

São Paulo: State and metropolitan region 14

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2011 2012E 2013E

4.13 4.80 5.70

1.67 2.02 1.95

Real GDP growth (%) Foreign Exchange – Ccy/USD (eop)

Latin America – GDP overview

GDP growth avg. ’06-’11

Average ’12E-’16E = 4.5%

GDP growth avg. ’12E-’16EArgentina

Brazil 1.67 2.02 1.95

483 490 500

1,847 1,775 1,775

12.44 12.50 11.80

2.75 2.57 2.55

Current Sovereign ratings

Moody's S&P

Source: J.P. Morgan estimatesSources: EIU (as of May 2012); Individual country central banks; World Bank1 Represents nominal GDP

7.0%

3.9%

4.4%

4.2%

1.4%

6.8%

0.5%

0.4%

5.8%

4.8%

4.8%

4.6%

3.7%

3.7%

2.2%

1.2%

2011 GDP¹ (US$bn):

177 249 333 2,474 1,154 448 15,094 13,104

Population as of 2011(mm)

29.4 17.3 44.7 196.7 114.8 40.8 311.6 332.4

Emerging markets real GDP growth by region (%yoy)

Latin America Emerging Asia Emerging Europe

Brazil

Chile

Colombia

Mexico

Peru

Moody's S&P

B3 / Stable B / Negative

Baa2 / Stable BBB / Positive

Aa3 / Positive A+ / Stable

Baa3 / Stable BBB- / Stable

Baa1 / Stable BBB / Stable

Baa3 / Positive BBB / Positive

Source: BloombergSource: J.P. Morgan

6.44.5

5.4 5.74.4

-2.2

6.14.0

2.9

8.3 8.79.7 10.4

6.85.8

9.1

6.9 6.27.16.1

7.3 6.8

4.2

-5.5

4.5 4.9

2.7

2004 2005 2006 2007 2008 2009 2010 2011 2012E

Latin America Emerging Asia Emerging Europe

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Country risk perception across Latin American countries have returned to pre-

crisis levels, still with apparent differences across countries

Country risk evolution (EMBIG index, spread over US treasuries)

1,800

2,000Latin America Argentina Brazil Colombia Chile Mexico Peru CA&C

1

200

400

600

800

1,000

1,200

1,400

1,600

1,165

367375

149168

0

200

01/03/07 11/04/07 09/04/08 07/06/09 05/07/10 03/08/11 01/07/12 11/07/12

Latin America Argentina Brazil Colombia Chile Mexico Peru CA&C

Current 367 1,165 149 120 130 168 124 375

1 year ago 440 807 214 181 156 205 190 386

2 years ago 336 529 171 143 121 158 146 279

3 years ago 373 738 226 220 137 220 192 379

4 years ago 701 1,711 441 504 359 422 441 608

5 years ago 248 385 199 185 124 146 163 216 Source: Bloomberg, as of November 07, 20121 Central America and Caribbean, based on CACI index

1

124130

120

149

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EM countries with the highest exposure to commoditi es (% of total exports unless stated otherwise)

China is now the top export destination for Brazil, Chile and Peru, but the trade links

between China and many other Latin American countries are also growing fast

Total Commodities by type: % of total exports to:Impact of 20% decline in commodities1

on current accountcommodities Oil Metals Agriculture US EU China (US$ billion) (% GDP)

Argentina2 61.0 -3.5 5.2 55.8 5.0 17.0 7.7 -9.4 -2.3Brazil 58.9 10.4 21.5 27.0 10.9 19.4 17.8 -25.0 -1.0Chile3 75.8 -14.5 65.1 10.7 10.9 17.5 22.7 -10.5 -4.2Colombia 72.4 58.4 4.7 9.3 37.8 15.4 5.9 -6.3 -1.7

Exports to China as a share of total exports

22.7

2005 2012

Colombia 72.4 58.4 4.7 9.3 37.8 15.4 5.9 -6.3 -1.7Ecuador 78.4 53.7 0.5 23.0 43.8 16.2 1.0 -2.5 -4.0Mexico 16.3 12.4 1.0 3.0 78.5 5.8 1.7 -2.0 -0.2Peru 89.7 10.3 62.7 16.8 13.3 18.6 15.0 -4.4 -2.1Uruguay 63.7 1.2 2.5 58.1 3.7 11.3 7.8 -1.0 -2.2Venezuela 97.6 95.1 2.3 0.1 38.0 6.4 13.3 -18.0 -6.0Latin America 50.9 17.8 14.3 18.2 35.3 15.4 10.5 -9.2 -1.2¹Assuming a drop in ALL commodity prices at once. ²In Argentina, oil exports are net of imports, that’s why it appears as a negative number. ³In Chile, the agriculture category includes cellulose and oil category is net of imports.Source: J.P. Morgan

Latin America: Export growth and commodity prices

60% %oya Export growth %oyaCommodity prices (JPMCCI prices)

Latin America’s terms of trade are heavily driven b y commodity prices, which in turn are driven by Chi na’s growth cycle

0.5 0.11.1

7.9

3.52.2

10.9

5.8

11.4

1.7 1.9

5.97.7 7.8

9.8

15

17.8

Mexico Ecuador Colombia Argentina Uruguay Venezuela Peru Brazil Chile

Source: J.P. Morgan

-60%

-40%

-20%

0%

20%

40%

2000 2002 2004 2006 2008 2010 2012

Source: J.P. Morgan

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Response to 1% change in US and EURO area GDP (% imp act level of GDP):Model estimated 1Q00 to 2Q11

Fourth QuarterRelative to

Challenges

Challenges Correlation between US and EURO growth with LATAM’s

Impulse response of Emerging Markets growth to a US/EMU real GDP growth shock over four quarters

11 Demographic and internal issues

� Low level of education in the region

� High inequality of income in most of the nations

� Lack of homegrown technological innovation

Source: J.P. Morgan

Region / Country First Quarter CumulativeRelative to

US/Euro area

Emerging Asia 0.9 1.4 0.6

China 0.7 1.0 0.4

India 0.3 0.6 0.3

Korea 1.4 2.4 1.0

Taiwan 2.6 4.0 1.6

Latin America 1.1 2.9 1.2

Brazil 1.3 2.6 1.1

Mexico 1.1 4.0 1.6

Emerging EM 1.0 3.4 1.4

Russia 1.2 3.8 1.5

Turkey 1.4 4.9 2.0

Emerging 0.9 2.1 0.9

Impulse response of Emerging Markets growth to a EURO area real GDP growth shock over four quarters

2 External economic issues

� Contagion from Europe: Large foreign claims of European banks suggest risk of capital outflows

� Potential impact of European bank deleveraging on bank credit in Latin America

� Fiscal balances are seeing deterioration in several Latin American countries this year due to the growth slowdown

3 Trade issues:

Response to 1% change in EURO area GDP (% impact le vel of GDP):Model estimated 1Q00 to 2Q11

Region / Country After 1 quarter After 4 quarter

Latin America 1.2 0.9

Brazil 1.5 1.0

Mexico 1.3 1.3

Emerging 0.7 0.6

Source: J.P. Morgan

A 1%-pt decline in US/Euro area growth has translat ed into a 1.2%-pt drop in Latin America’s growth si nce 2000, while a 1% growth in US/Euro real GDP generated a response of 0.9% in Latam growth after 4 quarters

EURO area real GDP growth shock over four quarters� Needs to take continued steps to integrate as a region

� Terms of trade are heavily driven by commodity prices, which in turn are driven by China’s growth cycle

� China’s influence in driving Latin America’s growth has increased sharply since 2008, particularly for Brazil.

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Agenda

Page

Brazil economy 6

Latin America 1

Brazil economy 6

São Paulo: State and metropolitan region 14

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12,9

17

20,000

25,000In USD In BLR

Brazil has favorable macroeconomic fundamentals such as strong economic growth, increasing income per ca pita...

Brazil is the leading economy in the region, having experienced a positive

transformation on its macroeconomics indicators

GDP per capita

7.5%

1.4%2.8%-0.2%

5.1%5.7%4.0%3.2%

5.7%7.5%

17.8% 18.0%13.3%

11.3%13.8%

12.2%15.1%

11.0%

GDP growth, interest rates and inflation

Real GDP growth (%) Selic (%) - EoP

3,800

4,300

4,800

18.0%

2.0%

Net exports ConsumptionGov’t spending Fixed investmentInventory change

Components of GDP

3,1

86

2,8

61

3,0

97

3,6

55

4,8

12

5,8

67

7,2

83

8,7

06

8,3

48 10

,81

4

12,9

17

0

5,000

10,000

15,000

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

… low unemployment rate and historical low risk prem ium

12%

-0.2%

2004 2005 2006 2007 2008 2009 2010 2011 2012E

5.7%4.5% 5.2%

4.3%6.5%5.9% 5.9%

7.6%

3.1%

2004 2005 2006 2007 2008 2009 2010 2011 2012E

Unemployment rate

Inflation rate (%) - IPCA

Source: J.P. Morgan and IBGE as of February 2012 Source: IMF as of January 2012

(200)

300

800

1,300

1,800

2,300

2,800

3,300

3,800

(1.3)%

61.0%

21.0%

Source: IBGE (Brazilian Statistics and Geography Institute),

J.P. Morgan Asset Management

Brazil’s EMBIG – spread over US Treasuries¹

4%

5%

6%

7%

8%

9%

10%

11%

12%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Aug-12

5.3%

Source: IBGE and J.P. Morgan economic research

0

600

1,200

1,800

2,400

3,000

Jan-99 Sep-01 May-04 Feb-07 Oct-09 Jul-12

Presidential elections

Argentine devaluation

Real devaluation

Credit crisis

Source: J.P. Morgan¹Also called “Risco Brasil”

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Brazil positive socio-demographic characteristics create ideal conditions for solid

economic growth

28.1%25.4%

22.8%

19.3% 18.3%

Poverty level almost halved

Evolution of poverty levels in Brazil (% of totalpopulation)

Breakdown of Brazil’s population by socioeconomicclass (mm individuals and % population)

Class A/B Class C Class D/E

96mm

47mm(24%)

56mm(29%)

8…

AgeMen Women

Evolution of population distribution by age (millions ofpeople)

Brazil has a young and fast-growing population

Total population: 270mm

Growth : 0.3%

Total population: 197mm

Growth : 0.9%

19.3% 18.3%16.0% 15.3%

2003 2004 2005 2006 2007 2008 2009

Source: IBGE as of February 2012Note: Poverty level line is defined as a monthly income lower than US$35 per capita

80+

AgeMen Women

Source: IBGE as of February 2012Note: Socioeconomic classes defined by household monthly income thresholds; A/B exceeding US$2,627, C between US$610 and US$2,627, D between US$439 and US$610, and E under US$439

2003 2011 2014E

13mm(8%)

96mm(55%)

66mm(37%) 44mm

(22%)

(24%)

106mm(54%)

31mm(15%)

(29%)

113mm(56%)+40mm

20 15 10 5 0 5 10 15 20

8…

7…

6…

5…

4…

3…

2…

1…

0-9

Source: IBGE, projection of population in Brazil

60%

40%

7%19%

Brazil France, Germany, Italy and UK

% under 35 years

% above 65 years

Growth : 0.3%Growth : 0.9%

Source: IBGE as of March 2012

20 15 10 5 0 5 10 15 20

80+

70-79

60-69

50-59

40-49

30-39

20-29

10-19

0-9

2012 2050

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Brazil can be considered a relatively closed economy, with exports and imports

representing only 11.9% and 12.6% of GDP respectively.

In 2011 Brazil exports reached US$256 billion, a 26. 5% increase from the previous year

12%Brazil

Brazilian and Latin American exports% of nominal GDP, USD terms, 2011

Capital goods Consumption goods Commodities

Brazil’s main exportsBy region/country and product, USD terms, YTD as of Aug. 2012

12%

17%

19%

26%

29%

30%

33%

Brazil

Colombia

Argentina

Peru

Venezuela

Mexico

Chile 0%

5%

10%

15%

20%

25%

30%

35%

Asia EU LatAm USA Africa Middel East

Capital goods Consumption goods Commodities

Source: (Top) J.P. Morgan, IBGE (Brazilian Statistics and Geography Institute), Central Bank of Brazil, J.P. Morgan Asset Management. (Bottom left) Central Bank of Brazil, Economy Ministry of Argentina, Central Bank of Venezuela, Bank of Mexico, Central Bank of Chile, World Bank, IBGE, DANE (National Administrative Department of Statistics of Colombia), J.P. Morgan, Central Reserve Bank of Peru, INEGI (National Institute of Statistics and Geography of Mexico), J.P. Morgan Asset Management. (Bottom right) MDIC(Ministry of Development, Industry, and External Commerce), J.P. Morgan Asset Management. Data reflect most recently available as of 9/30/12

31%

20% 19%

12%

5% 4%

Main Brazilian Exports (% of total exports) Destination of Brazilian Exports (% of total export s) Top 10 Export Companies (% of total exports)

Rank Products 2011% Products YTD 1H12%

1 Iron Ore 16.3% Iron Ore 12.7%

2 Soy 8.6% Soy 10.2%

3 Crude Oil 8.4% Crude Oil 8.9%

4 Cane Sugar 4.5% Poultry 2.8%

5 Coffee 3.1% Cane Sugar 2.7%

6 Poultry 2.8% Coffee 2.4%

7 Pulp 2.0% Fuel Oil 2.3%

8 Steel 1.8% Pulp 2.0%

9 Autos 1.7% Steel and Iron 1.9%

10 Beef 1.6% Airplanes 1.7%

Others 49.1% Others 52.3%

Source: MDIC.

Rank Country 2011% Country YTD 1H12%

1 China 17.3% China 18.1%

2 U.S 10.1% U.S 11.7%

3 Argentina 8.9% Argentina 7.5%

4 Netherlands 5.3% Netherlands 6.0%

5 Japan 3.7% Germany 3.1%

6 Germany 3.5% Japan 3.0%

7 Italy 2.1% Italy 2.1%

8 Chile 2.1% India 2.0%

9 U.K 2.0% Venezuela 2.0%

10 Spain 1.8% Chile 1.9%

Others 43.2% Others 42.6%

Company 2011% Company YTD 1H12%

Vale 13.5% Vale 11.9%

Petrobras 9.0% Petrobras 11.4%

Bunge Alimentos 2.6% Bunge Alimentos 3.5%

BRFoods 1.9% Cargill 2.2%

Samarco 1.7% Embraer 2.2%

Embraer 1.6% ADM do Brasil 2.1%

Cargill 1.6% Louis Dreyfus 1.8%

ADM do Brasil 1.3% Samarco 1.7%

Braskem 1.1% Braskem 1.4%

Louis Dreyfus 1.0% BRFoods 1.3%

Other 64.7% Other 60.5%

9BR

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Government Programs

PAC – Program for Growth Acceleration Minha Casa, Minha Vida (MCMV)

� Aims to accelerate the country’s economic growth through investments in infrastructure (housing, transportation, utilities and sanitation)

� PAC 1: Government forecasted more than US$ 328bn in

� It is focused on lower income families in order to facilitate access to housing by granting mortgages subsidies

� The resources are subsidized by the Union and FGTS

Bolsa Familia Fome Zero

� PAC 1: Government forecasted more than US$ 328bn in investments between 2007 and 2010

� PAC 2: Launched in March 2010 with investments estimations of around US$ 477bn from 2011 to 2014

PAC 1 Investments (US$ billion) – 2007 to 2010

Sector Total Estimated Total Concluded %

Logistics 213.9 111.7 52.2

Housing and Sewage 114.3 110.2 96.4

Total 328.2 221.9 67.5

Minha Casa, Minha Vida (MCMV) breakdown

Income Segment Proposed Units Contracted Units % of total

Up to 3 minimum wage 400,000 574,874 57.2

From 3 to 6 minimum wage 400,000 284,079 28.3

From 6 to 10 minimum wage 200,000 146,075 14.5

Total 1,000,000 1,005,028 100.0

� Already reached its goal contracting over 1 million units by the end of 2010

Source: Caixa Econômica FederalSource: Federal Government

� Aims to ensure the right of having adequate food to people with limited food access.

� Four main drivers: Food access, strengthening on family agriculture, income generation and social control

� Focused in the Northeast region (40.2% of the country’s poors), mostly in the rural area

� “Bolsa Família” is a program of direct income transfer to families in poverty serving more than 13mm households

� In June 2011, President Dilma Rousseff announced the expansion of the program, as part of the “Brasil sem Miséria”

� Aims to remove another 16.2mm people living in extreme poverty situation

Source: Ministry of the Social Development Source: Ministry of the Social Development10BR

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Main events and Investments

Large Events (Fifa World Cup and Olympic Games) Pre-salt Investments

� It is a new development stage for the oil industry in Brazil affecting strongly the investments’ dynamic in the sector

� It is located in the South and Southeast regions, Manaus

Fortaleza

DescriptionHost Cities and Total investments (USD bn)

18.6

6.3

24.9

FIFA World Cup 2014

Olympics 2016

Total Investments

� It is located in the South and Southeast regions, encompassing Campos, Santos and EspiritoSantos basins.

� Out of the 149,000 km2, 41,000 km2 have been already granted, of which 38,000 km² belong to Petrobras

� Pre-salt total investments estimated in US$ 43.7bn in the next four years

Petrobras Oil Production World Cup and Olympic Games planned infrastructure Investments (USD bn)

Manaus

CuiabáSalvador

Porto Alegre

Curitiba São Paulo

Rio de Janeiro

Brasília

Belo HorizonteHost cities

Natal

Recife

Planned Investments in US$ bn

Petrobras has already assumed that the pre-salt can easily double their current level of

proved reserves

3.4

6.0

4.1

13.5

1.9

2.3

0.9

18.6

0.0 5.0 10.0 15.0 20.0

Arenas

Urban Mobility

Ports and Airports

Total Civil Infrastructures

Energy and Telecom

Health and Security

Hotels

Total

Source: Ministry of Finance and Ministry of Sports

*COJO: Rio 2016 Organization Committee

(USD bn)

Olympic Games Planned Investments (US$ bn)

Sector

Investments

Total %Public COJO*

Accomodation 1,295.2 0.0 1,295.2 20.7

Technology 202.9 35.8 238.7 3.8

Sport Instalation 476.6 282.2 759.1 12.1

Tranport 3,730.0 0.0 3,730.0 59.6

Security 235.9 0.0 235.9 3.8

Total 5,940.6 318.0 6,258.6 100.0

World Cup Planned Investments (US$ bn)

1,971 2,004 2,022 2,000

2,500

4,200

1,778 1,792 1,8551,584

2005 2006 2007 2008 2009 2010 2011 2012 2016F 2020F

Thousands of Barrels/day

... ...

Source: Company fillings

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� Brazilian student spends 7.2 years at school which is not even enough to complete the basic education

� Average is below almost all Latin America countries

� Brazil spends US$2,098 per student per year on basic education. The OECD average is US$7,870

Brazil presents several bottlenecks that difficult its economic growth

Airports Education

� Current installations are not enough to support the World Cup and Olympic events demand

� In 1H2012, the government sold 51% of the airports of Guarulhos, Viracopos and Brasilia in an auction that brought US$ 12.2bn to the government

� Additional investments should reach US$ 3.7bn� In 2010, more than 18 million people were illiterate

� JPM estimates that the country should invest US$ 15bn on the sector every year in order to maintain the stability

Energy Logistics

� Additional investments should reach US$ 3.7bn

Airport Investments (US$ MM)

City - State Airport Investment (in US$ mm) % of total

São Paulo – SP Guarulhos 1,035.5 28.1%

Rio de Janeiro – RJ Galeão 449.4 12.2%

São Paulo SP Viracopos 438.5 11.9%

Brasília - DF Pres. Juscelino Kubit. 432.4 11.7%

Natal - RN São Gonçalo 291.2 7.9%

Others - 1,036.8 28.1%

Total - 3,683.8 100.0%

� New investment pipeline of concessions on toll roads, ports, and urban mobility projects

Source: Ministry of Sports and JP Morgan research team. Source: JP Morgan research team

9.3% 6.8% 6.6% 6.0% 5.4% 4.8%1.4% 1.1% 1.0% 0.4% 0.2%

11.3% 10.4% 9.6%

37.2%

India

S. Afri

ca

Peru

Brazil

Bolivia

Colom

biaM

exico

China

Parag.

Venez.

Chile

Italy

USRus

sia

Cuba

Illiteracy Rates (2005-2010) – in % of total Populat ion

� Four main plants in construction totaling US$ 31.8bn in investments (Belo Monte, Santo Antonio, Teles Pires, Jirau)

� Large cities are very short handed in the subway grid

� PPP with tax exemption project for three new subway lines in São Paulo

� Third round of federal road auctions (BR-040 and BR-116) for 2H12

� Estimated capex for projects above is US$ 6.1bn

� Expectation for the concession of four large ports (Prainha, Suape, Manaus and Ilheus) totaling over US$ 2.1bn

Source: EPE (Brazilian Government Energy Research Company) Source: JP Morgan research team

5963

66

72 74 77

80 84 86 88 90

45

55

65

75

85

95

2010

2011

2012

e

2013

e

2014

e

2015

e

2016

e

2017

e

2018

e

2019

e

2020

e

Supply

Demand

Supply vs Demand scenario in Brazil (in GW)

12BR

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Growth potential is still limited by microeconomic challenges

Challenges

� Diminished competitiveness due to high tax burden and bureaucracy costs

� Lack of education: scarcity of well-skilled labor and low productivity limit potential growth

� Logistics bottlenecks also limits potential growth

15.2

16.5

17.5

18.7

Inadequate Suply of infrastrucutre

Tax Regulations

Selected competitiveness indicators (2012)

Indicator Brazil Latam OECD

Days to start a new business

119 54 12

Most of the challenges are on the microeconomic fro nt, affecting the supply-side

Brazil: The most problematic factors in doing busin ess (%)

% of GDP in Infrastructure

Investments in Infrastructure

Country (Period) % of GDP

� High inequality of income and poverty

� Great dependence on commodities

� Government higher expenditures don’t mean higher investments

� Infrastructure investments totaled 2.1% of the total GDP in the period of 2001-2007. Much lower than the comparable Latamcountries and other Emerging countries

1.8

2.3

3.0

6.2

8.3

12.5

10.620.0

15.2

0.3

2.1

3.9

6.0

7.4

10.1

11.1

17.2

17.5

0.0 5.0 10.0 15.0 20.0

Inflation

Foreign Currency Regulations

Access to financing

Corruption

Inadequately educated Workforce

Restrictive Labor Regulation

Inneficient government bureaucrecy

Tax Rates

Inadequate Suply of infrastrucutre

2012

2011

business

Years to close a business

4 3 2

Recovery rate frominsolvent firm (%)

18 31 68

Number of hours spent preparing taxes

2,600 382 186

Total Tax rate (% profit)

67 48 43

Labor tax and contributions (% profit)

41 15 24

Cost to Export (US$ per container)

2,275 1,546 1,085

Source: World Economic Forum

Brazil (2001-2007) 2.1%

Chile (1998-2001) 6.2%

Colombia (1998-2001) 5.8%

India (2006-2007) 5.6%

China (2000-2003) 7.3%

Vietnam (1998-2003) 9.9%

Thailand (2000-2003) 15.4%

Source: World BankSource: World Economic Forum 13BR

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Agenda

Page

Latin America 1

Brazil economy 6

São Paulo: State and metropolitan region 14

Brazil economy 6

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The state of São Paulo can be well compared, in economic terms, to the largest

nations in the Latam RegionStates participation on the GDP in US$mm and % (as of 2009)

144 (9%)

177 (11%)

542 (33%)

1,621 (100%)

Minas Gerais

Rio de Janeiro

São Paulo

Brazil1,621

8828,392

13,10111,606

10,1799,1171,000

1,200

1,400

1,600

1,800

10,000

12,000

14,000

16,000

18,000GDP (USD mm) - as of 2009

GDP Per Capita - as of 2009

Latam Peers Comparation – GDP, GDP per capita and population (as of2009¹)

GD

P (

US

$ m

m)

GD

P p

er c

apita

(U

S$)

Source: World Bank and Fundação SEADE.

¹The latest GDP information from the State of São Paulo is dated as of 2009.

357 (22%)

65 (4%)

66 (4%)

69 (4%)

95 (6%)

108 (7%)

144 (9%)

0 500 1,000 1,500

Others (19 States)

Santa Catarina

Distrito Federal

Bahia

Paraná

Rio Grande do Sul

Minas Gerais

30,000In USD In BLR

GDP per capita evolution – State of SP

Source: IBGE and Fundação SEADE

Components of GDP evolution–State of SP

5.0%

GDP growth projection (% yoy)

State of São Paulo Brazil

542

882

307 329173 127

30

8,392 7,876 7,665

4,412

9,117

0

200

400

600

800

1,000

Brazil State of SãoPaulo

Mexico Argentina Venezuela Chile Peru Uruguay

0

2,000

4,000

6,000

8,000

10,000

Population as of 2009 (mm)

193.2 41.0 112.0 40.0 28.4 17.0 28.8 3.3

GD

P (

US

$ m

m)

GD

P p

er c

apita

(U

S$)

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6,63

0

7,38

4

8,07

9

8,98

8

9,77

5

11,3

34

12,2

29

13,1

01

0

5,000

10,000

15,000

20,000

25,000

30,000

2002

2003

2004

2005

2006

2007

2008

2009 2% 2% 2% 2% 2% 2%

50% 49% 48% 47% 47% 44%

48% 49% 50% 51% 51% 54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004 2005 2006 2007 2008 2009

Agriculture Industry Services

Source: IBGE and Fundação SEADE.

4.2%

4.5%

4.2%4.3%

3.7%

4.4%

3.0%

3.5%

4.0%

4.5%

5.0%

2011 2012-2015 2015-2030

Source: IBGE and Fundação SEADE. Source: IBGE and Fundação SEADE.15

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Demographic pyramid comparation – as of 2010

The age pyramid of São Paulo is similar to the national averag e...

80+

70-79

60-69

AgeMen Women

80+

70-79

60-69

AgeMen Women

80+

70-79

60-69

AgeMen Women

80+

70-79

60-69

AgeMen Women

São Paulo positive socio-demographic characteristics create ideal conditions for

solid economic growth

Source: IBGE census of 2010.

Population evolution projection in the State of SP Population growth rate

-10.0% -5.0% 0.0% 5.0% 10.0%

60-69

50-59

40-49

30-39

20-29

10-19

0-9

Bahia

-10.0% -5.0% 0.0% 5.0% 10.0%

60-69

50-59

40-49

30-39

20-29

10-19

0-9

Brazil

-10.0% -5.0% 0.0% 5.0% 10.0%

60-69

50-59

40-49

30-39

20-29

10-19

0-9

São Paulo

-10.0% -5.0% 0.0% 5.0% 10.0%

60-69

50-59

40-49

30-39

20-29

10-19

0-9

Rio Grande do Sul

Population growth rate: Period of 2000 -2010 in % yoy400000 to 14 years 15 to 64 years 65 years or more

… while the demographic distribution of Rio Grande d o Sul and Bahia represent extremes of the country

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Source: IBGE and Fundação SEADE.

1.17%1.19%

1.09%

1.0%

1.1%

1.2%

1.3%

Brazil (without State of SP)

Brazil State of SP

Population growth rate: Period of 2000 -2010 in % yoy

0

5000

10000

15000

20000

25000

30000

35000

40000

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Pop

ulat

ion

(tho

usan

d pe

ople

)

Source: IBGE and Fundação SEADE.16

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Production growth trends and exports distribution

� In the short term there will be an increase in demand for natural resources and energy

State of São Paulo - Production Growth projection (% yoy)

Sectors 2012-2015 2015-2030

High Techn. Intensity 7.14% 5.13%

Production growth projection by sectors Comments

Sectors Examples

High Technological Intensity

•Aerospace, Electronic and Telecommunications, IT, Chemical and Pharmaceutical

� In the long term the state economy dynamics will be driven by technology-intensive goods production

� Given the better conditions of public finances sustainability, the Government sector will become a key growth driver

High Techn. Intensity 7.14% 5.13%

Public Administration 4.88% 4.32%

Med.Techn. intensity 4.92% 4.07%

Services 3.66% 3.83%

Natural Resources 5.07% 3.58%

Low Techn. intensity 3.74% 3.13%

Total 4.76% 4.16%

Main Product Exports of the State of São Paulo (% of total exports of the State)

Products 2011% Products YTD 3Q12%

Top 10 Export Companies of the State of São Paulo (% of total exports of the State)

Company Sector 2011% Company Sector YTD 3Q12%

In terms of trade, the State of São Paulo accounts for 23.4% of all exports and 36.3% of all imports o f Brazil 1

Intensity Chemical and Pharmaceutical

MediumTechnological Intensity

•Shipbuilding, Motor vehicles, Metallurgy, Petroleum refined products, Machinery and Electrical equipment and Rail transportation

Low Technological Intensity

•Recycling, Pulp and Paper, Food and Beverages, Textiles Tobacco and Footwear.

Source: FIPE/USP and Secretary of Planning and Regional Development Source: Plano Pluria nual 2012-2015

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Products 2011% Products YTD 3Q12%

Sugarcane 10.6% Sugarcane 7.6%

Airplanes 5.3% Airplanes 6.0%

Other Sugar 4.6% Other Sugar 3.5%

Meat 2.1% Fuel 2.8%

Cars 2.1% Cars 2.2%

Fuel 1.9% Alcohol 1.9%

Orange Juice 1.8% Meat 1.7%

Alcohol 1.5% Soy 1.7%

Coffee 1.2% Orange Juice 1.6%

Car Parts 1.2% Levies 1.3%

Others 67.7% Others 69.7%

Company Sector 2011% Company Sector YTD 3Q12%

Embraer Aerospace 6.7% Embraer Aerospace 7.4%

Copersucar Sugar 3.4% Petrobras Oil 3.8%

Petrobras Oil 3.2% Caterpillar Industrials 3.3%

Caterpillar Industrials 3.0% Copersucar Sugar 3.1%

Raizen Ethanol 3.0% Volkswagen Automobile 2.6%

GM Automobile 2.8% Raizen Ethanol 2.4%

Volkswagen Automobile 2.5% GM Automobile 2.1%

Mercedes-Benz Automobile 2.1% Cutrale Juice 1.8%

Ford Automobile 1.7% Mercedes-Benz Automobile 1.8%

Cutrale Juice 1.7% Ford Automobile 1.7%

Others - 69.9% Others - 70.0%

Source: MDIC.1 As of 2011

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2011 2012-2015 2015-2030

GDP growth projection by administrative region of the State of São Paulo – 7 largest growth by period

Geographically GDP growth trends

Barretos

Ribeirão PretoSão José do

Rio Preto

Belo Horizonte - MG

Barretos Franca

Belo Horizonte - MG Belo Horizonte - MG

Ribeirão Preto

Source: FIPE/USP and Secretary of Planning and Regional Development

GDP Growth in the state of São Paulo presents a tre nd movement, in the future years, toward the states of Rio de Janeiro and Minas Gerais, which are, after São Paulo, the largest reg ional markets in the country

Ribeirão Preto

AraraquaraMarília

PresidentePrudente

Rio Preto

São José dos Campos

Curitiba

Rio de Janeiro -

RJAraraquara

São José dos Campos

Curitiba

Rio de Janeiro -

RJ

Santos

Sorocaba

CampinasAraraquara

São José dos Campos

Curitiba

Rio de Janeiro -

RJ

Santos

Sorocaba

Campinas

Ribeirão Preto

Metropolitanade São Paulo

Comments

� Campinas: Has competitive advantages such as specialization in technology-intensive sectors and their own role as a producer and consumer markets

GDP Growth Projection by administrative region

AdministrativeRegion

GDP as of 2009 (US$mm) GDP Growth projection (% a.a)

2009 % of the State 2011 2012-2015 2015-2030

Metropolitana de SP 306.6 56.53% 4.17% 4.26% 4.11%

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role as a producer and consumer markets

� Sao José dos Campos: Geographically privileged (close to major regional markets of Rio de Janeiro and Minas Gerais) combined with specialization in technology-intensive sectors (metallurgical complexes, military and aerospace)

� Santos: Majorly due to the investments on the pre-salt area

� Registro, Presidente Prudente and São José do Rio Preto: Far away from the influence of the metropolitan region, has low productive diversification and weak consumer market

Metropolitana de SP 306.6 56.53% 4.17% 4.26% 4.11%Campinas 84.2 15.53% 4.11% 4.73% 4.22%São José dos Campos 27.8 5.12% 4.80% 6.05% 4.83%Sorocaba 26.9 4.96% 4.19% 4.87% 4.20%Santos 20.0 3.69% 4.02% 4.96% 4.03%Ribeirão Preto 13.7 2.54% 4.32% 4.48% 4.06%São José do Rio Preto 12.4 2.29% 4.40% 4.43% 3.94%Araraquara 10.1 1.86% 4.72% 5.14% 4.29%Bauru 9.8 1.81% 4.29% 4.51% 4.01%Marília 7.4 1.37% 4.41% 4.53% 3.98%Araçatuba 6.3 1.15% 4.18% 4.50% 3.87%Presidente Prudente 6.2 1.14% 4.49% 4.41% 3.95%Franca 5.5 1.01% 4.21% 4.57% 3.89%Barretos 4.0 0.73% 4.53% 4.66% 3.92%Registro 1.3 0.24% 3.64% 4.43% 3.52%Total – State of SP 542.2 100.00% 4.22% 4.52% 4.15%Source: FIPE/USP and Secretary of Planning and Regional Development

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The Metropolitan region of São Paulo

Metropolitan region of São Paulo

Metropolitan State of SP Brazil

Area (km²) 7,943 248,209 8,514,877

Population as of 2011 (in mm) 19.9 41.7 196.7

Summary and comparable table Map of the Metropolitan region of São Paulo

Challenges

� Urban mobility is a huge bottleneck for the economic growth

� Projects for expansion and improvement of the public

Source: IBGE and Fundação SEADE.

¹Participation in the total of the value added

Demographic density (inhabitants / km²) 2,501 168 23

Population growth (2000 - 2010 in %a.a) 0.97% 1.09% 1.17%

Urbanization level as of 2011 (%) 98.9% 95.9% 84.4%

GDP as of 2009 (in US$mm) 307 542 1,621

GDP per capita as of 2009 (in US$‘000) 15,499 13,101 8,392

Agribusiness participation¹ (%) 0.1% 1.6% 5.6%

Industry participation¹ (%) 24.6% 29.0% 26.8%

Services participation¹ (%) 75.3% 69.4% 67.5%

Strengths

� Stands out as the largest financial, industrial and commercial center in the country

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� Projects for expansion and improvement of the public transportation

� Uneven development of urban activities by territory

� Population density is greater in the peripheral areas while the economic activity and jobs related to it are focused on the expanded center

� High criminality rate compared to other regions of Brazil

commercial center in the country

� Consist as a diversified technological hub for diverse research

� Large headquarters concentration of the most important industrial complexes, commercial and financial companies

� The largest consumer market in the Latin American region

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