Download Global Economic growth

2009 BIAC Business Roundtable
Lisbon - Portugal
Global Economic growth: how deep will it
fall and when will it bounce back?
Brazil’s Perspective
José Augusto C. Fernandes
CNI
Global Economic growth: how deep will it fall and when will it bounce back?
Trends in Brazil
Latecomer, but
highly affected
In transition to
recovery?
Less impacted than
OECD. More than
India-China
Our problems are
now opportunities
Policies: credit,
taxes and housing
construction
Our projections before...
the next revision
Global Economic growth: how deep will it fall and when will it bounce back?
Assets to
recoverty
Latecomer
in %
GDP real % variation to the same quarter of previuos year
7
6
5
4
3
2
1
0
-1
-2
II
III
IV
I
2006
Euro Area (16 countries)
II
III
IV
I
2007
II
III
IV
2008
United Kingdom
Source: OECD & IBGE
Global Economic growth: how deep will it fall and when will it bounce back?
Brazil
Transition to recovery
Industrial production
(% variation to the same month of previous year)
15
10
in %
5
0
-5
-10
-15
-20
Euro Area (16 countries)
United Kingdom
Brazil
Source: OECD
Global Economic growth: how deep will it fall and when will it bounce back?
Mar-09
Feb-09
Jan-09
Dec-08
Nov-08
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
-25
Crisis impacts in Brazil
 Less intense than OECD. But more than India and China
 Industry production dropped 16,2% (sep-08 to mar-09)
 Crisis channels:
 Credit difficulty (external lines of credit vanished)
 Financial low Liquidity
 Confidence reduction (both supply and demand side)
 Investment
 Demand reduction
 Deterioration of labor market is still in place
Global Economic growth: how deep will it fall and when will it bounce back?
What Brazilian government is doing
FISCAL
 IOF reduction (tax on financial operations)
 Postponed tax collection (PIS/PASEP and Cofins)
 Income tax reduction
 IPI reduction for the automobile industry
 IPI reduction for industry appliances
 IPI reduction for some products of construction
industry
Global Economic growth: how deep will it fall and when will it bounce back?
What Brazilian government is doing
CREDIT
 Reduction of reserve requirement ratio (almost to half
of it)
 Credit Special Program, created by BNDES to finance
industrial enterprises working capital
 PROEX expansion (export credits)
Interest rate reduction to historical lowest level
Central Bank intervention (buying dollars)
SPECIAL PROGRAM
Construction housing plan – plan to build 1 million
subsidized houses for low income people
Global Economic growth: how deep will it fall and when will it bounce back?
Brazilian economy: assets for recovery
 International reserves above US$ 200 billions
 Lower Brazilian internal debt exposition to currency
devaluation
 International net creditor (international reserves are
higher than external debt)
 Banking system is solidly structured
Global Economic growth: how deep will it fall and when will it bounce back?
Brazilian economy: assets for recovery
 Financial market is more regulated, ensuring “no
exposition” of international toxic assets (subprimes)
 Internal demand has been less affected than the
demand of most countries
 Brazilian enterprises have low indebtedness level
 Public debt-to-GDP ratio decreased from 52,4% in
2003 to 36% in 2008
Global Economic growth: how deep will it fall and when will it bounce back?
CNI forecasts
Global Economic growth: how deep will it fall and when will it bounce back?
Relações comerciais Brasil-México
www.cni.org.br
São Paulo
- Abril de 2009 Global Economic growth: how deep will it fall and when will it bounce back?