HISTORY, CULTURE ,SOCIETY AND ECONOMY OVERVIEW

BRAZIL :

HISTORY

Colonisation and slavery : 1500 : Arrival of Pedro Alvares Cabral :

Brazil is claimed by Portugal. 1815 : Brazil is elevated from colony to

sovereign kingdom united with Portugal. 1822 : independence from Portugal :

Brazilian Empire.Military republic : 1889 : overthrow of monarch Pedro II :

Republican government = military dictatorship

HISTORYRepression : 1930 : defeated presidential candidate

Getúlio Vargas leads a first coup d'état and accesses to presidency.

1937 : 2nd coup d'état : Brazil became a full dictatorship : 20,000 people imprisoned, internment camps for political prisoners, censorship of the press.

1954 : suicide of Vargas. 2 presidents between 1956 and 1962. 1964 : João Goulart leads a coup d’état :

military regime. 1968 : Fifth Institutional Act : full

dictatorship.

HISTORY

Re-democratization process : 1974 : General Ernesto Geisel president :

end of the military indiscipline, torture, censorship of the press and dictatorship.

2 presidents between 1985 and 1994. Fernando Henrique Cardoso elected as

president in 1994 and again in 1998 : Plano Real (Royal Plan) grants stability to the Brazilian economy.

Political stability : Luís Inácio « Lula » da Silva is elected in

2002 and re-elected in 2006.

INTRODUCTION

Federal Republic of Brazil Capitale : Brasília Language : portuguese Currency : Real (BRL) Total area : 8 547 877 km2 (5th) 5 regions and several states Climates : Tropical arid to humid

equatorial 65% water

CLIMATES

SOCIAL FIGURES IN 2010

192 298 177 inhabitants Yearly growth rate : 1.160% Fecundity index : 2.19children/woman

Child death rate : 21.86‰ Life expectancy : 72.26 y Death 6.35‰

EDUCATIONAL AND WORK FIGURES Alphabetization rate (age 15 and over) In 2008 : total population: 88.6%

male: 88.4% female: 88.8%

2010 : Brazil unemployment rate stands at 7.40% of the labor force

Sources : http://www.populationdata.nethttp://www.tradingeconomics.com

CULTURE

Derived from portuguese culture because of Colonial history.

Strongly influenced by African, indigenous and non-Portuguese European (Italian, German) cultures.

RELIGION : no official religion. over 80% of Catholics

about 9% of Protestants The "Candomblé" (5%) : slaves from Nigeria and Benin. animist deities + Catholic figures.

Some Jewish, Muslim, Buddhist.

KEY POINTS OF THE ECONOMY

Key points of the Brasilian Economy Agriculture Energy High technology

KEY POINTS OF THE ECONOMY : AGRICULTURE

Brazil is the largest exporter of iron, coffee, soya, orange juice, bovine meat and sugar.

KEY POINTS OF THE ECONOMY : ENERGY

Biofuel: ethanol 1st world producer Great potential for future Great market demand

KEY POINTS OF THE ECONOMY : ENERGY

Biofuel: ethanol A strong production increase Doing business with USA and EU Competition with traditional

farming

KEY POINTS OF THE ECONOMY : ENERGY Biofuel Oil

14th World producer 8billion barrels reserve

discovered

Sub-Salt: Scenario for 2010-2020 /1Capex Production Gross Revenues

US$ billion million / barrels US$ billion

2010 700 - - 2011 1,683 - - 2012 1,981 3.9 0.3 2013 2,476 34.1 2.6 2014 3,805 34.1 2.6 2015 5,623 38.0 2.9 2016 6,390 60.9 4.6 2017 9,900 123.9 9.3 2018 10,197 145.4 10.9 2019 14,362 170.8 12.8 2020 14,793 232.9 17.5

Total: 72 844 63

1/ Assumes oil prices at USD 75/barrel in coming years, and a 4-year interval between the start of investment in each of the fields. Figures at current prices.

KEY POINTS OF THE ECONOMY : ENERGY Biofuel Oil Hydropower:

Only 27% of Hydro power capability is used

The Itaipu Dam, a project from Paraguay and Brazil

KEY POINTS OF THE ECONOMY : ENERGY Biofuel Oil Hydropower: Nuclear power:

2 nuclear power plants Enriched Uranium

production 2012 : 60% of Brazilian

need 2015 : 100% of Brazilian

need

KEY POINTS OF THE ECONOMY : HIGH TECHNOLOGY

Automotive industry Ford factory for South America

Market

Aeronautic industry Embraer leader on regional jets

Evolution of the Brazilian economy since 1994 Creation of the Real currency Struggle against the inflation plague Privatization of the economy

FINANCIAL AND BUDGETARY OVERVIEW

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

1995

.03

1995

.11

1996

.07

1997

.03

1997

.11

1998

.07

1999

.03

1999

.11

2000

.07

2001

.03

2001

.11

2002

.07

2003

.03

2003

.11

2004

.07

2005

.03

2005

.11

2006

.07

2007

.03

2007

.11

2008

.07

2009

.03

Steel8% Petrochemicals

4%

Mining8%

Power31%

Telecom31%

Oil & Gas7%

Sanitation1%

Transports2%

Others1%

Minority participation

1%

Financial6%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

03

Jul-0

3

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

0

20

40

60

80

100

120

140

160

180

200

BRL/USD Real Exchange Rate Index (RHS)

A slow shift from the interior market to globalization A high consumption within the national market a

federal state The reduction of the national debt now 40% of the GDP Investment difficulties due to a lack of easily accessible credit

FINANCIAL AND BUDGETARY OVERVIEW

15

20

25

30

35

40

45

50

Dec-9

0

Dec-9

1

Dec-9

2

Dec-9

3

Dec-9

4

Dec-9

5

Dec-9

6

Dec-9

7

Dec-9

8

Dec-9

9

Dec-0

0

Dec-0

1

Dec-0

2

Dec-0

3

Dec-0

4

Dec-0

5

Dec-0

6

Dec-0

7

Dec-0

8

Aug09: 45.2%

Excesses of the federal system Lack of control of the national government

concerning financial transfers A low Gini index global rank of 116th

The ICMS tax 1. Creates a kind of tariff barrier between the states

2. « Fiscal war » between the states to boost investment

3. Financial dependancy relations 4. Brazilian exports less attractive than

local markets

FINANCIAL AND BUDGETARY OVERVIEW

FINANCIAL AND BUDGETARY OVERVIEW

Positive evolutions A country less affected by the crisis Increase in consumption market Brazil has now become a net

creditor

A & B16%

C52%

D14%

E18%

A & B13%

C44%

D14%

E29%

Class Participation as a % of total population

2004

Class Participation as a % of total population

2008

90

95

100

105

110

115

120

125

130

135

140

145

2003 2004 2005 2006 2007 2008 2009 2010 2011

Ago 09: +0,4%

Jul 09: 0%

Economic Research Itaú UnibancoPage - 23 -

Gini Index

0.54

0.55

0.56

0.57

0.58

0.59

0.60

0.61

0.62

19

92

19

93

19

95

19

96

19

97

19

98

19

99

20

01

20

02

20

03

20

04

20

05

20

06

20

07

Source: CPS/FGV and PNAD/ IBGE

Middle Class (% of population)

25

30

35

40

45

50

1992

1993

1995

1996

1997

1998

1999

2001

2002

2003

2004

2005

2006

2007

Miserable (% of population)

15

20

25

30

35

40

1992

1993

1995

1996

1997

1998

1999

2001

2002

2003

2004

2005

2006

2007

Years of Schooling (average of total population)

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

5.6

5.8

6.0

1992

1993

1995

1996

1997

1998

1999

2001

2002

2003

2004

2005

2006

2007

LONG TERM SOCIAL IMPROVMENTS

SHORT TERM OPPORTUNITIES

2012 World Cup• Infra-structure investments

• Airport improvements

• Urban transports including subways and railroads

• Hotels

2014 Olympics Games40,0

21,5

15,8 14,4

9,4 6,5

1,8

Beijing2008

Atenas 2004

London 2012

Rio 2016Barcelona 1992

Sydney 2000

Atlanta 1996

Civil Construction 10,5%

Housing Services6,3%

Services5,7%

Oil & Gas5,1%IT

5,0%

Logistics4,8%

Other62,6%

LONG-TERM OPPORTUNITIES

GDP growth (5%) better than EU (2%) and US (2.2%) from 2010 to 2020

Controlled inflation : 3.5% forecasted in 2020

Strong consumer market

Interest rate should fall from 7% to 3.5% by 2020

QUESTIONS???