1. The BNDES and the perspectives for the Brazilian Economy Luciano Coutinho President of the Brazilian Development Bank (BNDES) March 3 rd, 2010

2. 2 Brazil aced the crisis test The Brazilian economy can grow much faster than the average in developed countries; The domestic market will make the expansion in demand feasible: basic household consumption, housing and durable goods; Investments will be driven by four main sectors: oil & gas, electric power, logistics and residential construction; Opportunities for intensive strategies in innovation and social and environmental sustainability; Main challenges: increase aggregate investment/GDP rate, and boost competitive progress in the manufacturing industry.

3. 3 Global Growth

4. 4 Countries’ share of Brazilian exports Source: Ministry of Development, Industry and Trade.Elaborated by: MF/SPE 20022008 Developing Countries 38% Developing Countries 52% Developed Countries 62% Developed Countries 48% Developing countries have increased their share of Brazilian exports. These countries were less affected by the crisis and they are expected to show higher growth levels in the years to come.

5. 5 GDP may grow 5% p.a. in the 2010- 2014 period Source: IBGE. GPD: Annual Real Variation (%) * 2009 and Avg 2010-14: BNDES' Forecasts. Sources: IBGE and BNDES. *

6. 6 Source: IBGE, Secex e Funcex. Brazilian industrial downturn was mainly due to weak external demand... Industrial Production, Retail Sales and Exports (index: September 2008=100)

7. 7 Growth Rate Quarter by Quarter (%) Household consumption resumed growth

8. 8 Source: IBGE Unemployment rate down from 10.2% in Jan/05 to 7.2% in Jan/10 Unemployment rate fell...

9. 9 Source: IBGE …and wages increased Up to December 09

10. 10 Investment has been recovering since the second quarter of 2009 *forecasting

11. 11 Credit/GDP ratio grew even after the crisis worsened in Sept/08 Evolution of Credit/GPD ratio (%) *Up to January

12. 12 State-owned banks sustained credit after the crisis The BNDES alone was responsible for 37% of the increase in credit from Sept/08 to Jan/10 Source: Bacen. Contribution to Credit Growth (Sept/08-Jan/10) Credit Growth (Index September 2008 = 100)

13. 13 Impact of anti-cyclical policies on debt Source: IMF and Brazilian Central Bank.

14. 14 Investment has strong growth path Source: BNDES. Elaborated by: APE/BNDES Forecast of Investment Ratio 2009-2012 (% of GDP)

15. 15 BNDES was responsible for 37% of total credit increase since Sept/08 Source: BNDES. *considering the average exchange rate for each year BNDES Approvals and Disbursements 1 (US$ billion) *last 12 months up to January 2010

16. 16 The government continues to stimulate the economy US$/R$ = 1.80

17. 17 My House, My Life

18. 18 BNDES ProCopa Programs Arenas Up to US$ 2.7 billion to build and remodel stadiums and urbanization investments in surrounding areas. Tourism Up to US$ 556 million to build, remodel, expand and modernize hotels. US$/R$ = 1.80

19. 19 Challenges for infrastructure Belo Monte Hydroelectric Plant and, afterwards, Tapajós; Railways, roads and ports; 2014 World Cup; PAC - Urban Transport; 2016 World Olympics; High-speed Train (TAV); Environmentally sustainable projects and concern for surrounding areas.

20. 20 Investment outlook: positive prospects US$/R$ = 1.80 Source: BNDES Forecast

21. 21 Investment in Industry: Domestic-led sectors have already recovered from the crisis Sectors US$ billionGrowth 2005-20082010-2013 % year Oil and Gas1121718.8 Mining2925(3.1) Steel15205.7 Petrochemical51728.9 Vehicles12177.3 Electronics8126.7 Pulp & Paper 10 0.5 Industry1912717.3 Source: BNDES

22. 22 Sectors US$ billionGrowth 2005-20082010-2013% year Electric Power38516.4 Telecom37 0.2 Sanitation122211.7 Railroads91613.2 Roads23337.8 Ports51422.9 Infra1111526.5 Investments in Infrastructure were not affected by the crisis Source: BNDES

23. 23 Brazil’s Long Term Challenges Resume and qualify long-term planning (energy, logistics, environment, IT infrastructure,...); Promote and stimulate domestic savings in order to provide long-term funds for investment (banks and capital market) Develop capacity for innovation and competitiveness in the manufacturing industry, and promote global presence of Brazilian companies (vs. significant challenge due to exchange rate appreciation) Increase opportunities for social mobility (job expansion, development/improvement in education) and reduction of the inequality in income distribution; Promote innovation and development of renewable energy sources.

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