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MINISTRY OF PLANNING
Brazil: Growth, Reforms and Brazil: Growth, Reforms and Social InclusionSocial Inclusion
Minister Paulo BernardoMinister Paulo BernardoNova Iorque, abril de 2009
MINISTRY OF PLANNING
2
• Recent Developments of Brazilian Economy: 2003 - 2008
– Strength of macroeconomic fundamentals– Growth with social commitment
• Counter-cyclical Policies
MINISTRY OF PLANNING
• Brazil has consolidated a mass consumption market and has promoted the emergence of a new middle class, capable of inducing endogenous growth
Objective of PPA for 2004 – 2007: Growth with generation of employment and income, environmentally sustainable and reducing social inequalities
MINISTRY OF PLANNINGFrom 2003 to 2008, the Brazilian economy has grown 27,4%, an average of 4,1% per year.
4,2
2,2
3,4
00,3
4,3
1,3
2,7
1,1
5,7
3,2
4
5,7
5,1
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Average 2003-2008 4,1% p.y.
Real GDP Growth (% py)
Source: IBGE.
MINISTRY OF PLANNING
0
1
2
3
4
5
6
7
8
dec/98jun/99dec/99jun/00dec/00jun/01dec/01jun/02dec/02jun/03dec/03jun/04dec/04jun/05dec/05jun/06dec/06jun/07dec/07jun/08dec/08
Primary Surplus
Fiscal policy consistency
Source: Central Bank
Nominal Deficit
1999-2002 2003-2006 2007-2008
Primary Surplus 2,91 4,09 4,34
Nominal Deficit 4,23 3,50 2,01
% of GDP
MINISTRY OF PLANNING
0
5
10
15
20
25
30
jun/02dec/02jun/03dec/03jun/04dec/04jun/05dec/05jun/06dez/06jun/07dez/07jun/08dec/08
Consumer Price Index
Interest rate
Source: Central Bank
Accumulated 12 months
Upper band
Target – 4,5%
The Central Bank is credible and autonomous to pursue the inflation
target...%
MINISTRY OF PLANNING
Public and Private Partnerships
Operational Autonomy of the Central Bank
Bankruptcy Law Civil Service Efficiency
Tax Reform
The strength of macroeconomic fundamentals is accompanied by
structural reforms
MINISTRY OF PLANNING
Source: FGV/PNAD/IBGE
Growth has reduced income inequality and taken 20 million people
out of poverty
Population below of poverty line
Gini Index
28.4 28 27.626.7
28.2
25
22.8
19.3
17
15
18
21
24
27
30
1999 2000 2001 2002 2003 2004 2005 2006 20070,60,594 0,595 0,596
0,5860,583
0,5720,569
0,563
0,556
0,52
0,54
0,56
0,58
0,6
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
%
MINISTRY OF PLANNING
8,611,410,5
7,66,45,3
2,63,3
2002 2003 2004 2005 2006 2007 2008 2009*
Fonte: MDS e SOF/MP. *LOA 2009
Households assisted(million) 8,76,73,6n.d.
Amount transferred(R$ billion)
(Growth rate)
11,1 (target)
11,0
In 2008, the expansion of the amount transferred includes the accumulated inflation, measured
by the consumer price index (INPC) until 2007, and the extent of benefit to young people from 15
to 17 years old.
Aiming to improve income distribution, the government extended the Bolsa Família program.
Bolsa FamíliaAmount transferred and number of households assisted
9
11,1 11,1
% Budget 0,84% 0,95% 1,33% 1,37% 1,42% 1,41% 1,50% 1,52%
MINISTRY OF PLANNING
0,2
1,0 1,1 1,31,7
3,4
5,0
6,3
7,3
8,4
13,0
0
2
4
6
8
10
12
14
1998/1999 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009*0
2
4
6
8
10
12
14
Fonte: MDA* Plano Safra.
10
Disbursements of PRONAF – Plano Safra
(R$ billion of December/2008; Deflator: INPC)
Beneficiaries of PRONAF(in 1.000 contracts)
Source:MDA.
To ensure income for small farmers, in 2009, the resources for Pronaf have been expanded. The amount for the current year represents more than seven times the amount for 2002, in real terms.
Year North Northeast Middle-West
Southeast South Brazil
2002/03 35.1 285.6 30.1 118.4 435.0 904.2
2003/04 91.7 545.7 57.9 194.6 500.2 1390.2
2004/05 99.6 562.9 57.7 236.6 678.3 1635.0
2005/06 101.4 809.2 67.4 303.9 630.8 1912.9
2006/07 104.7 708.7 61.4 277.4 539.7 1691.9
2007/08 94.8 556.7 63.9 298.8 631.9 1645.3
Total 527.3 3468.8 338.5 1429.0 3415.9 9179.5
MINISTRY OF PLANNING
11
Unemployment reached the lowest rate in December 2008 (6,8%).
8,5
6,817
18
19
20
21
22
dec/02 jun/03 dec/03 jun/04 dec/04 jun/05 dec/05 jun/06 dec/06 jun/07 dec/07 jun/08 dec/08
6,0
7,0
8,0
9,0
10,0
11,0
12,0
13,0
14,0
Occupied people Unemployment rate
Labor Market
Source: IBGE.
MINISTRY OF PLANNING... It has contributed, in conjunction with inflation control, to recovering the purchasing power of the population.
percentage of the minimum wage expense in acquiring the basic food basket
Source: Dieese and MTE.
40
50
60
70
80
90
100
jan/03jul/03 jan/04jul/04jan/05jul/05jan/06jul/06 jan/07jul/07jan/08jul/08 jan/09
MINISTRY OF PLANNING
12,515,2
43,0 52,3
15,514,0
29,0 18,5
0%
20%
40%
60%
80%
100%
2002 2003 2004 2005 2006 2007 2008
Class E
Class D
Class C
Class AB
Development of Economic Classes(percentage of population between 15 and 60 years old)
And, in conjunction with the Bolsa Família Program, it has allowed significant social mobility. Brazil today is a middle class country.
Source: CPS/FGV (IBGE).
MINISTRY OF PLANNING
With the expansion of the middle class and the increase of credit, for the period 2004 to 2008:•Retail sales increased 47.3%, with an emphasis on equipment and office materials, computing and communication (+275.9%) and furniture and kitchen appliances (+120.8%)
•Growth of 84.7% on sales of national cars
•Expansion of 52.3% on sales of the supermarket sector
•Construction: 10.3% annual growth over the past two years
MINISTRY OF PLANNING
• Counter-cyclical Policies
• PAC (Growth Acceleration Program)• Strengthening the BNDES• Energy• Minha Casa, Minha Vida Housing Program• Tax Reduction for motorcycles, automobiles,
building material and kitchen appliances
15
MINISTRY OF PLANNING
Source: IBGE
% of GDP
Investment is an important pillar of the current growth cycle
MINISTRY OF PLANNING
Disbursement of BNDES(R$ billion of December/2008; deflator IPCA)
Private investment, in turn, has received support from BNDES, with emphasis on infrastructure and SMEs
17
Disbursement of BNDES for infrastructure and SMEs(R$ billion of December/2008; deflator IPCA)
Source: BNDES.
MINISTRY OF PLANNING
The challenge is to maintain public investment even in the scenario of falling revenues. Such investment, however, is essential to induce private investment and mitigate the fall in aggregate demand caused by the external crisis.
* 2009 = LOA 2009 (Law + Credtis)Source: STN/MF e SOF/MP.
Public Investment, 2000 – 2009* (R$ billion; commitment paid)
18
Rem: Administered Revenues at prices of Feb/09 (deflator: IPCA). Excluding pension income.
Source: RFB/MF.
Administered Revenues – real growth (IPCA)(the same month of the previous year)
MINISTRY OF PLANNING
Region Logistics Energy Social and Urban Total
North 7,1 23,2 4,1 34,4
Northeast 14,1 42,2 19,7 76,0
Southeast 25,2 134,0 7,0 166,2
South 9,6 19,9 1,2 30,7
Middle-West 4,4 15,4 1,5 21,3
National 35,6 60,1 221,4 317,1
TOTAL 96,0 295,0 255,0 646,0
Investment by region2007-2010
Investment by region2007-2010
R$ billion
MINISTRY OF PLANNINGENERGY: OVERVIEW
• Increase of 100,000 GWh of energy supply between 2002 and 2007.
• Construction of 26 hydroeletric power stations, corresponding to 11,917 MW in addition (10% more over 2007 production)
• Investment of R$ 4.2 billion on the construction of 26 transmission lines, covering 6,800 Km.
• Investments of US$ 28 billion until 2013 and different systems of oil production starting by 2020.
• Estimated production of oil of 2.1 million bpd in 2013 and 2.48 million bpd in 2015. Today the production is about 1.9 million bpd.
• Oil reserves are estimated to increase between 40% to 60% (15.5 million boe).
• About 7 milion m3/d of natural gas available to the market in 2013 and 40 million m3/d in 2020. Today the production is about 59 million m3/d.
• Strengthening Brazilian petrochemical chain and attraction of investors in the supply chain.
20
MINISTRY OF PLANNING
Minha Casa, Minha Vida
The Program Minha Casa, Minha Vida (My House, My Life), launched in March of this year, aims to finance the construction of 1 million homes, at a cost of about $ 60
billion, for families with incomes of up to ten minimum wages, in partnership with
states , municipalities and private enterprise.
MINISTRY OF PLANNING
22
• Commitment to Macroeconomic Sustainability
Average economic growth of 4.1% in the last six years and the strengthening of fiscal, monetary and external sector indicators.
• Social Inclusion
20 million people left poverty in the period 2003 to 2007.
About 18 million Brazilians entered the middle class from 2002 to 2008.
Doubling the amount of credit offered to the person.
Increase of 40% in the number enrolled in higher education.
Creation of 8.9 million formal jobs.
MINISTRY OF PLANNING
Thank you!