1. International Consulting Economists’ Association 12 April 2011 Brazil : Has the Future finally arrived? Peter Collecott

2. Outline Some Basics A Selective History Serial Disappointment Recent Success Is Success now Sustainable? Brazil as a BRIC Future Prospects and Challenges

3. Scale (1)

4. Scale (2)

5. Scale (3) Brazil is: the 5 th largest country the 5 th most populous country the 4 th most populous democracy The 7 th /8 th largest economy Brazil has: the largest area of tropical forest the greatest biodiversity the largest flows of fresh water etc etc

6. Some Numbers Area Russia17.1 Canada10.0 China 9.6 US 9.6 Brazil 8.5 (US - Alaska 8.1) Australia 7.7 India 3.2 Population China1,340 India1,190 US 311 Indonesia 238 Brazil 190 Russia 142 Urbanisation 84% GDP$2.09 tn (market)$2.18 tn (PPP) GDP/head$10,800 $11,300

7. A Selective History  1500 European discovery  1700s Minas Gerais Gold Rush  1808 arrival of Portuguese Court  1822 Independent Empire  1888 Abolition of Slavery  1889 Declaration of a Republic  1930 - 1985 Authoritarian/Military Regimes  1985 - 1994 Transition to Democracy  2003 - 2010 President Lula

8. Success and Serial Disappointment

12. Recent Success GDP ($bn)

13. Recent Success Exports and Imports ($bn)

14. Recent Success Exports/GDP (%)

15. Recent Success Poverty Indicators BrazilUMICs Poverty (% of population below national poverty line)22 Urban population (% of total population)8475 Life expectancy at birth (years)7271 Infant mortality (per 1,000 live births)1821 Literacy (% of population age 15+)9094

16. Recent Success

17. Recent Success Human Development

18. Is success sustainable? Inflation

19. Is success sustainable? Public Sector Debt

20. Is success sustainable? Forex Reserves ($bn)

21. Is success sustainable? The Exchange Rate

22. Is success sustainable? Direction of Exports

23. Is success sustainable? Brazil produces what a globalised world needs: – Raw materials – Food – Biofuels – and now oil & gas Yet over 50% of exports are manufactures And it can continue to do so: – Untapped mineral resources – Land, agricultural technology, water – Clean energy matrix – 43% renewables – Rapidly internationalising conglomerates

24. Brazil as a BRIC Goldman Sachs’ verdict Doubts in 2003: – Openness to trade – Investment and savings levels – Public and foreign debt levels Enthusiasm in 2011: – Brazil best performing BRIC market since 2001 (US$) – 5 year CDS lower post-crisis – Weights in portfolio: China 36.8% Brazil 33.3%

25. Brazil as a BRIC Brazil is an emerging global power – Certainly economically; probably politically In many ways the most solid of the BRICs: Democratic Politically stable Unlikely to suffer social upheaval – Urbanisation has happened – The middle class is growing – Population is stabilizing Unlikely to suffer badly from Climate Change The most “like minded”

26. Brazil’s Global Role Current Stereotypes China – the workshop of the world India – provider of IT-based services Brazil – global provisioner

27. Brazil’s Future Role? Probably will be the global leader in bio-industries – Bio-energy – Biomaterials from bio-refineries – Bio-pharmacuticals – Bio?? Brazil has the requisite: – Biodiversity – Agricultural land - and water – Agricultural expertise – Industrial base – S&T base

28. The Challenges In order to benefit maximally, Brazil needs to address: – The political culture – The inefficiencies of the State: Public services The taxation system The justice system Labour laws – Low investment, in particular in: Education Infrastructure – The need for continual improvements in efficiency and innovation Brazil needs to turn itself from a well functioning democracy to a modern efficient state