Brazil: Sustainable Growth Min. Guido Mantega April 2010

Source: The Economist Produced by: Ministry of Finance 2 * The Economist forecast ** Government forecast Brazil: one of the fastest growing economies in 2010 GDP growth forecast – selected countries – in % of GDP

3 New social and economic paradigms Emphasis on a more robust growth Employment generation Social inclusion and income distribution Investment enhancement Government encourages and promotes growth Efficient stimulus programs

4 Source: CAGED /MTE Produced by: Ministry of Finance * Government forecast of 1.8 million for 2010, of which 657,259 comprised within the accumulated year period up to Mar-2010 Robust employment generation and more formal jobs Net employment generation – in thousands of workers

Source: PME/IBGE Produced by: Ministry of Finance 2010: the smallest unemployment rate in a time series Unemployment rate – in % of economically active population

Source: MDS, MTE and CPS/FGV Produced by: Ministry of Finance New middle class and Brazilian unification Social class distribution - in % of population

Source: Kantar World Panel Produced by: Ministry of Finance Social classes diversify consumption % change in the purchased value (food, beverages, hygiene and cleaning) * Average monthly household income is specified below * Class D/E: from R$ 0 to R$ 1,115 Class C: from R$ 1,115 to R$ 4,807 Class A/B: from R$ 4,807 and on

8 8 Highest employment rate in the world Net employment generation forecast for Q2 2010* Source: Manpower Consulting Produced by: Ministry of Finance Gap within companies that expect job raising (43%) as opposed to the ones which expect a reduction (5%) in Q (% between Q1:2010 and Q4:2009) * Expected employment generation from Manpower Consulting research for the Q based on interviews with 850 companies in Brazil

Purchasing power of minimum wage Today’s minimum wage buys more products – in numbers of staple food baskets Source: DIEESE Produced by: Ministry of Finance 9

10 Fontes: IDV Produced by: Ministry of Finance Dinamycs of Brazilian domestic demand Retail sales – selected countries - % change from 2008 to 2009

Source: IBGE Produced by: Ministry of Finance 11 Retail Sales - PMC % change from preceding every 12-month period * Including automobiles, motorcycles, parts and pieces, and construction materials

12 Government action is essential Infrastructure stimulus: PAC PAC is a strategic investment program with management and infrastructure planned actions Industrial sector policy Income distribution Acting and efficient State-owned companies (BNDES, BB, CAIXA, BNB, Petrobras)

13 Investment enhancement Source: IBGE Produced by: Ministry of Finance % change from preceding year * Ministry of Finance Forecasts

14 Federal Government and State-Owned Companies Investment Source: Ministry of Finance Produced by: Ministry of Finance Cash basis - % of GDP * Ministry of Finance Forecasts

15 Industry investment volume Source: BNDES Produced by: Ministry of Finance Industry resource distribution - realized and planned by sector of activity

16 Decade of infrastructure to come Source: Exame Infrastructure Yearbook Produced by: Ministry of Finance Investments in R$ billions

Source: Abecip and CAIXA Produced by: Ministry of Finance 17 Construction growth in Brazil Average number of contracts by presidential terms

: Sustainable and quality growth Growth is sustainable because it doesn’t create macroeconomic imbalances Inflation under control – efficient inflation targeting regime Robust fiscal rules – primary surplus target of 3.3 % of GDP in 2010 and continuous reduction in net public debt Low external vulnerability

Fontes: IBGE and Brazilian Central Bank Produced by: Ministry of Finance Evolution of inflation index, target and expectations % % change from every 12-month period 19 * Market Forecasts FOCUS Report from April 9 th, 2010

20 Decomposition of Monthly Inflation (% change) Source: IBGE.Elaborated by: MF/SPE

21 Sustainable PAC: reduction of public debt Fiscal results – primary surplus and nominal deficit/surplus - in % of GDP Source: Brazilian Central Bank and The Economist Produced by: Ministry of Finance * Ministry of Finance Forecasts **

23 Sustainable nominal deficit: reduction of public debt Nominal deficit - in % of GDP Source: The Economist Produced by: Ministry of Finance * Ministry of Finance Forecasts in February, 2010 ** G-20 nominal deficit average refers to Apr 15 th, 2010 ed.

24 Sustainable PAC: reduction in public debt Public Sector Net Public Debt - in % of GDP Source: Brazilian Central Bank Produced by: Ministry of Finance * Ministry of Finance Forecasts in February, 2010

25 IIF Ranking on Investors Relation and Data Transparency

26 Deficit in Current Account does not bind growth, nor increase external vulnerability Current Account – in US$ billions and % do PIB Source: Brazilian Central Bank Produced by: Ministry of Finance * Government Forecasts 26

27 Lower external vulnerability International reserves and external debt - in % of GDP and index Source: Brazilian Central Bank Produced by: Ministry of Finance

28 From supporting to leading country Brazil is respected and highly regarded. Change: from debtor to creditor and new protagonist position. The myth that “Brazil is a second-class country” has fallen apart. Brazil could became one of the most dynamic countries in this decade.