Invest in Brazil Overview end 2009

Macro-environment

Brazil―Some Key Facts Population 200m― 6 th in world Land area―slightly smaller than the US GDP(2008) nearly $2 trillion―10 th in world Brazil's debt achieved investment grade status early in 2008 Brazil plans to double oil production to 3.8 million barrels per day within 10 years―to become 7 th in world By 2010, BRICs will contribute almost half of global consumption growth Source CIA Fact Book, Goldman Sachs, MEM Brazil

Economy (1) Brazil has successfully recovered from the global downturn in 2008 Growth forecast now expected to be 0% in 2009 and 5% in 2010 Forecast remains unchanged for interest rate of 8.75% and inflation of 4.2% in 2010 Likelihood of a monetary policy tightening in 2010 is increasing due to high rates of consumption External accounts still strengthening as FDI inflows remain close to record high levels and the trade balance has surprised on the upside However, fiscal accounts remain the main downside risk which are likely to remain loose throughout 2010 as the elections period approaches AFIRE ranks Brazil 2 nd in the World for property investment value appreciation Russel Investments ranks Brazil first out of the BRIC Group Nov. 30 th 2009

Economy (2) Challenges that Brazil has to face in the next couple of years in order to remain strong: – Government debt – The small share of investment in infra-structure in spite of the PAC (Accelerated Growth Program) – Degree of openness of the economy – Double attention to Real valuation that may affect exporters – Exposure to the export of commodities against lower rate of manufactured products

Macro-economic Indicies F2010F GDP (US$ Billion) GDP (%) Consumption (%) Fixed Asset (%) Export (%) Import (%) Habitants (Million) Source HSBC

Macro-economic Indicies F2010F Unemployment Inflation (IPCA - %) Interest rate (% aa) Exchange rate (R$/US$) International invest. (US$ Billion) Source HSBC

Political President Luiz Inácio Lula da Silva enjoys very high rates of popularity with 81% in Sep However, there is a contrast between Lula and his government with 69% support Presidential elections will take place in 2010 and it is expected that government will face fierce competition from the opposition Moreover, Lula and PT (Labour Party) cannot count on a charismatic candidate at this stage Social programs like School for All, My House, My Life, besides the PAC are the engine supporting Lula’s strong popularity Economic stability is also maintaining high levels of government support There are still important projects to be voted through Congress like Pre-Salt guidelines, fiscal/tax reform, among others.

Social Brazil still has huge challenges from a social perspective – 31% (2005) of the population is below the poverty line – Household income or consumption by percentage share: lowest 10%: 1.1% highest 10%: 43% (2007) – High rates of unemployment – Only 36% of people have graduated from high school – Only 12% of people have compeleted a university degree

Technology Brazil ranks as the 6 th global vehicle manufacturer It has been in the forefront of fuels technology specially with the Ethanol program started in the 70’s Since the advent of Flex-fuel vehicles in 2003 there has been a boom―over 75% of new cars and light commercial vehicles sold are in this category Sales of alcohol now exceed gasoline sales at retail Nearly 50% of Brazil’s energy mix is from hydro-electric or other renewable sources.

Ease of Doing Business 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile Source World Bank World Bank Index Brazil 129 out of 183 A knowledgeable local partner is essential for successful investment in the fast growing Brazilian economy

Environmental Issues Brazil is an emerging environmental power on the world stage It is entrusted with the: – world’s last major tropical rainforest – one of the largest renewable reserves of fresh water – the planet’s most diverse stock of biodiversity – the best energy matrix among major countries – and the most successful industrial-scale production of renewable fuels Actively increasing usage of biofuels Brazil can adopt a leadership position in a world increasingly preoccupied with climate change.