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Economic Outlook 2015

A prospect for recovery

March/2015

©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.


Index

• Brazil as a global player

• Political scenario

• Economic scenarios • Global scenarios


− 2015 Key-points − USA
− Economic activity − Europe
− Income and wages − Latin America
− Foreign sector − China
− Money market − India
− Financial market − Russia
− Public sector − Japan
− Investments − Southeast Asia
− Agriculture − Commodities
− Industry activity
− Services

Note: All decimals are described in the Brazilian format. So in this presentation the use of “.” to represent thousands, instead of “,” which represent decimals.
A country with resources
“Your ancestors must have pleased God that he has given you
so much. I envy you”
Zhao Zhyang, Chinese Prime Minister in 1985 on his visit to Carajás mine, delighted with the
abundance of natural resources in Brazil.

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Brazil as a global player

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• USA, the highest nominal GDP in US$ globally,
Brazil as a global player representing 25% of the total.
Economic activity
• China now accounts for 14% of the total, also
Nominal GDP  US$ Billions appearing as the highest GDP PPP (purchasing
2014 power parity) today.

1 17.404 • EIU forecasts indicate that China will overtake the


10.366 US by 2050 also in Nominal GDP
2
3 4.613 • Brazil lost the 6th position as the world's largest
4 3.827 economy in 2013, and remained as the 7th also in
5 2014. EIU indicates that in the next two years India
2.985
may surpass Brazil
6 2.852
7 2.249 • Canada, which appears as the 11th among the
largest economies, is expected to overtake Russia
8 2.159
in 2015 due to the unstable scenario in the
9 2.158 European country.
10 1.959
• Even with the current unstable political or economic
71.543 situation, the IMF holds the prospects that Brazil
Source: Research – Deloitte (based on EIU data.)
could become the 5th largest economy by 2050.
5 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Social indicators
Brazil as a global player
92,5% of illiteracy rate
Natural resources

Position in the global


74 years
Life expectancy
production ranking
203 million Gini
Agriculture 8,5 million Km2. people, Index 51,9
7% of the entire 3% of global 154th total ranking
1st 1st Soy Coffee global territory population
0,74 HDI
23rd Wheat 1st Sugar cane 5th highest globally 79th total ranking

SWOT
1st Maize 3rd Beef Largest player in commodities, Low productivity

Mining
Oil and
gas
Water
resources
S agricultural products and basic
manufactured goods.
America's second largest
W Large deficit in infrastructure
Social issues still loss-
making.
economy.
Renewable
3rd Iron ore
12nd Oil 1st resources Diversification in the export Instability in China;

1st Niobium
34th Natural gas 3rd Drinking
water
O tariff and new business
partners;
Investment in alternative fuels.
T Fall in the commodities
prices
Investor distrust.
11st Gold 10th Shale gas 112 nd Sanitation
Source: IMF, CIA World Factbook, US Geological Survey, ONU, FAO, IBGE, Bacen and EIU. Last available data.
6 Production of minerals, oil and gas reserves, potential water resources ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic scenario

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2015 Key-points

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 Searching for better transparency and fiscal control;
 Best management practices of public and private companies;
Business Key-points  Maintenance of the "economic tripod" (foreign exchange, inflation,
fiscal).

 Rising food prices;  Project prioritization


Market
 Increase in the cost of electricity; confidence  Steady increase in social and
economic demand in infrastructure.
 Water scarcity;
 Tax adjustments.
Inflationary Infrastructure
pressure demand

Key-points
for 2015 in
 Inflation target and expected  The lower demand from China,
increase in the US interest rates. Brazil India and Europe will require
Increased Falling greater efforts of large national
basic commodity companies to keep their sales;
interest rate prices  Market value drop of exporting
companies and lower liquidity for
Low the stock market;
unemployment  Need for new business
 Shortage of man-power;
rate partnerships.
 Maintenance of consumption;
 Pressure on prices.

9 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.


Economic activity

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Economic activity Real GDP
Gross Domestic Product % Variation – end of the year
After a slow growth of the Brazilian economic 7.6
activity, the market remains pessimistic for the 6.0
coming years. 5.0
The expectation is that 2015 remains on 4.0 3.9
stand-by, waiting for the government 2.3 2.0 2.5
1.8
responses in the first quarter compared to the 1.0
steps to be taken regarding the economic 0.1 0.4
support.
-0.2

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Position of Brazil among the largest
global economies - Nominal GDP
5
7 7 7 Nominal GDP US$ Trillions
7.1
8 Thousands R$ Trillions
6.5
9 6.0
10 5.6
11 5.2
4.8
4.1 4.4
3.7 Exchange rate
3.0 3.2
2.7 devaluation
2.1 2.4
16

0.9 1.1 1.4 1.7 1.6 2.1 2.5 2.2 2.2 2.2 2.3 2.4 2.5 2.7
1980 1990 2000 2005 2010 2015 2020 2030 2050
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
11 Source: Research-Deloitte (based on BACEN, Focus, EIU and IMF). 2015-2018 forecast. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
Consumer price index
The price of food and housing in the country were the hardest hit by the inflation increase. Agricultural commodities and manufactured goods also
had a significant price increase in the transfer to the consumer.
The fight against inflation in the country, without a deterioration in interest and public sector, will be the main challenge of Dilma during this year.
All that is conducive to sustainable growth in the medium term.

Inflationary % Variation over IPCA inflation target


goods and services
Education 10 Limite superior
Upper limit Meta datarget
Inflation inflação
10 Consumption Household
9 Limite inferior
Lower limit IPCA %
8
Food 8
6 Health
7 6.5 6.4 6.5
% var. p.y.

4 Clothing Larger inflationary 5.9 5.9 5.8 5.9 5.7


Household
trend 6 5.5 5.5
goods
2 4.5
Transports
5 4.3
0 4
-2 Communication 3
3.1
-4 2
-0.2 0 0.2 0.4 0.6 0.8 1
1
% var. p.m. (dec)
0
Volume of the bubble based on the average 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% price variation in the last 3 years

12 Source: Research-Deloitte (based on Central Bank and IBGE data). 2015-2018 forecast. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity Real interest rates
Interest rates Relation between Selic rate and Price index (IPCA) - %

The main instrument to combat


inflationary growth are the interest rate, 11.6 Inflation reach the
Speculative expectancy of
goal, decrease on
relied on the orthodox economic tripod. falling rates with Levy's
interest rates  Inflow Inflationary entry in Central Bank
For 2015 the focus is to increase the Selic of foreign capital “boom”
gradually during the year, which together 7.2
6.3
with the reduction of public spending, may 5.4 5.5 5.0 5.6 5.4
4.6 4.3
reduce at medium term the rising inflation 3.8
in the country. 2.4
1.3

Interest rates - Selic 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% Variation – end of the month


14
13 12.50
12.75 12.50 12.00 12.00
12 10.75
11.75
11 10.50 11.38
9.50
10 10.25 9.75 9.00
9 8.75
8.50
8 7,25
7
2009 2010 2011 2012 2013 2014 2015 2016
13 Source: Research-Deloitte (based on Central Bank and IBGE data). 2015-2018 forecast. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Country Risk – EMBI+
Economic activity 700
Exchange rate Base points
600
With the economic growth in mid-2010, the
12/31/2014
results of currency appreciation caused a 500
major incentive for inflow of foreign currency, 400
leading to an expectation of less than R$/US$
1.80 for 2014. 300

But with the current unstable political and 200


economic environment, the real depreciated,
100
and closed the year at R$/US$ 2.66.

Exchange rate
3.25
3.00
2.75 R$/€
2.50
2.25
2.00 R$/US$
1.75
1.50

14 Source: Research-Deloitte (based on Central Bank, JP Morgan, EMBI +,IBGE). 2015-2018 Forecast. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
International reserves

International reserves
US$ Billions, end of the year Lower expectative among foreign market.
Reservas Internacionais Fall in commodities exports
US$ Bilhões, no final de cada período

379 376 374 377


352
Empréstimos
FMI Loans do FMI 379 376 374
International
Reservas reserves
Internacionais 289
352
239
289
194
180 239

180 194
86
28 25 54
21
86
17 28 21
28 25 54
21 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
17 21 28
15 Source: Research-Deloitte (based on Central Bank and IBGE data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
Financing the economy

Without enough domestic savings to finance investments and promote the growth of national activity, the borrowing requirements of the
Brazilian economy almost tripled, from R$ 56.9 billion after more controlled results of the financial crisis in 2009 to R$ 217.2 billion in 2014.

National economy net lending


R$ Billions
Savings / GDP (%) (right axis) Net lending (R$ Billions)
50 27.3 20
19
0 18
-50.1 -56.9 17
-50
16
-100 15
14
-150 13
-200 12
11
-250
-217.1 10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

16 Source: Research-Deloitte (based on Central Bank and IBGE data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
National treasure
Government expenditures on personnel, social programs, investments and administrative costs exceeded revenues in 2014 at R$ 17.2 billion. With
the push of the electoral calendar, expenditures were accelerated and reached R$ 1.03 trillion; the tax revenue, hampered by the weakness of the
economy and tax relief measures, reached R$ 1.01 trillion. The data, resulting in a treasure deficit, should significantly impact the public debt level
over current GDP

Income and expenses of the National Treasury


R$ Billions Public debt over GDP - %
Net revenue Total expenses
1,100 100% of GDP
1,000
900
65
800 63 64 64 64
700 61
600 59
57 57
500
400 53 54
300
200
100
2006 2007 2008 2009 2010 2011 2012 2013 2014

17 Source: Research-Deloitte (based on National Treasury and EIU data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Transformação
Economic activity Adm., saúde e educação públicas
Outros serviços
GDP Composition - Supply perspective GDP¨% Composition by activity(*) Comércio
2004-2014 Ativ. Imobiliárias e aluguel
• The services sector remains the main thread Agriculture
from the supply perspective in current GDP. Transformation Financial services
Health and public administration Civil Construction
• Over the past 10 years, the participation
Other services Transports
increase of other sectors, Agriculture and 4%4%2% 19%
Trade 4%
Eletricity,
Industry were minimal. 5% water and gas
Real estate IT 6% 15%
• The service sector represents about 70% of 7%
Agropecuária Mining
9%
the Brazilian GDP, fueled mainly by trade, Intermed. Financeira e seguros 12% 13%
retail and public activities. 4% 2% 2% 4% 13%
4% Construção Civil 2%
4% 19%
Transportes, armazenagem e correio 5%
• Individually, the main activity that adds the
most value in the Brazilian economy changed Prod. Distrib. Eletricidade, gás e água
5% 5%
in the last ten years. Serviços de Informação
Extrativa Mineral 18%
• We can perceive a clear drop in the share of 6% 7%
manufacturing in the Brazilian GDP in the last
10 years. 15%
7% 6%
• Which also shows the increased participation
of public services; rising from 15% to 18%
9% 9%
16%
• The share of trade increase 1 pp. 13%
2004 12% 2014 13%

18 Source: Research-Deloitte (based on Central Bank, EIU and IBGE data). (*) Exempt of taxes and adjusted to 2014.. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
GDP Composition – Demand perspective
GDP % Composition by activity
10%
2004-2014
• GDP can also be seen from the demand
perspective. Indicating how much the country 13%
has spent to structure their own economy.
Consumption
Government
• Taking into account household consumption,
government consumption, investment Investments
14%
(calculated by gross capital formation), and the Exports
Trade Balance, we can see that just as in the 4% -1%
Imports
supply situation, population consumption is the 17% 16%
"driving force" of the economy also in demand. 15%

• It is important to note the increase of 2% (or


US$ 750 million) in government spending (from
19% to 21%) during the last 10 years, focused
especially in social programs.
60%
• The rest of the matrix composition continued 19% 21% 60%
virtually unchanged if analyzed during 2004-
2014.

2004 2014

19 Source: Research-Deloitte (based on Central Bank and iBGE). Quarterly national accounts adjusted for 2014. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Economic activity
GDP Composition - Regional
The Southeast, and more specifically the state of São Paulo, still is the main driving force Regional growth evolution
of the Brazilian GDP. Index: 2006 = 100
Representing 55% of the total of contributions from all the States. 220

However, in a period of 10 years, we can see the strong growth in the Northeast region
200
(raw numbers), and in both North and Centre-West (transformed into a base index 100).
This strong growth is due mainly by the arrival of large companies in these regions and
increased investment in both infrastructure focused on creating economic hubs within 180
regions.
160
5% Regional GDP
5%
9% % Composition 10% 140

Southeast
120
13% South
14%
Northeast 100
56% Centre-West 55% 2006 2007 2008 2009 2010 2011 2012
North
17% North Northeast
16%
Southeast South
2002 2012 Centre-West
20 Source: Research-Deloitte (based on Central Bank and iBGE data). National Accounts data. 2012 = Last data available. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Income and wages

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Nominal average income
End of the year - R$
Income and wages 2,122
Unemployment and wages 1,967
1,850

The unemployment rate in the Brazilian economy has been showing 1,623
decline since October 2003, reaching its lowest level in 2014 (4.3%). 1,515
1,344
1,282
This has helped minimum wage appreciation policy that has been 1,162
1,086
adjusted since 2005 according to GDP variation during the period. 1,011
874 862 908

Unemployment rate in Brazil 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
End of the year (%)
Minimum wage
10.9 End of the year - R$
10.5
788
9.6 724
678
8.3 8.4 622
544
7.4 510
461
6.8 6.8 409
373
338
287
5.3 5.2 240 260
4.6
4.3 4.3

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Research - Deloitte (based on Central Bank and iBGE). Note: Corresponding data from the metropolitan areas of Salvador, Recife, Belo
22 Horizonte, Rio de Janeiro, Porto Alegre and Sao Paulo. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Income and wages
Economic classes Population in each economic class
% breakdown
Among the income indicators, the main highlight is 50.0%
the increase of population in the middle lasses. The C 25.3
and D class increased from 42% to 48% in 9 years. 48.4%
48.0% 47.7%
While the population within income classes A and B 23.3
also increased. The share rose from 13% to 15% 46.7%
between 2005 and 2014. 45.9%
46.0%
44.9% 44.9% 21.3

44.5% 44.0%
Euromonitor Methodology: 43.8%
44.0% 43.7%
43.3% 43.2% 43.5%
19.3
42.6% 42.4% 42.7%
A/B Classes – % breakdown of people with a 42.0% 42.3%
41.7% 43.0%
gross wage of up to 150% of the average 42.0%
17.3
worker.

C/D Classes – % breakdown of people with a 15.0% 15.2%


40.0%
14.5% 14.7%
15.3
gross salary between 50% and 150% of the 14.2%
13.8% 13.9%
average worker. 13.4% 13.5% 13.6%
38.0% 13.3
E Class – % breakdown of people with a lower 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
gross salary 50% of the average worker.
E C/D A/B

23 Source: Research - Deloitte (based on Euromonitor data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Foreign sector

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Foreign sector
Trade balance
Currently imports has been rising above the exports, generating an erosion in the trade surplus in recent years. It is clear to point out that this
trend could create a deficit, especially with the increase in the value of imports, the appreciation of the dollar against the real, but mostly the
increase in commodity prices during 2014, which affected the main Brazilian trade partner: China.
However, in recent months, the price of minerals and agricultural products has fallen sharply, resulting into a turnover into Brazilian trade
balance, which closed the year with a deficit of US $ -4 billion, lower than the expected by the market.

Brazilian trade balance


US$ Billions Exportação
Exports Importação
Imports

256
243 242 240
226 223 225 229
161 153
121 128
161 153
138 173
119 121
97 91
73 63 74
58 56 60 47 48

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Research - Deloitte (based on MDIC data).
25 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Main exported products - 2014 Main imported products - 2014
Foreign sector
Trade balance 18% 14% 19% 14%
Soy Mining Fuel and Mechanic
Brazilian export list
lubricants equipment
2014 8%
10%
Oil Transports 12% 8%
material Electronics Vehicles
7% 5%
Beef Chemicals

Commodities – 63% Commodity price index


Capital and Consumption goods – 28% Index base (Dec/2006=100)
Fuel – 7%
205
Others – 2%
180
155
130
105
80
Dec/2014
55
Dez 2007 Dez 2008 Dez 2009 Dez 2010 Dez 2011 Dez 2012 Dez 2013 Dez 2014 Dez
Preço das Commodities
Commodities price Volume das
Exports Exportações
volume

26 Source: Research - Deloitte (a based on MDIC, Central Bank and IMF data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Foreign sector
Partners with:
Trade balance
Exports
Imports
Major trading partners of Brazil and its products
Both

Gold
Iron ore

Soy
Soy
Iron ore Vehicles Electronics
Chemicals Autoparts
Pesticides
Oil Fungicides
Diesel Iron ore
Iron Pulp
Thrusters Poultry
Coffee Coffee
Propane Machinery Iron ore
Equipment Soy
Electronics
Beef Mobile
Sugar cane
Diesel
Oil

Oil
Beef
Cars

Cars

27 Source: Research - Deloitte (based on Central Bank, IMF and EIU). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Brasil – Argentina 23
Foreign sector US$ Billions
19
20
18 18
Trade balance 17 16 16
14 14 14 14
13 13
The decline in manufactured goods exports to Argentina influenced 12 11
10 10
directly in the trade balance since the beginning of the year, this is 8
among the main reasons for the fall in the income results e between 6
the two countries at the end of the year.
It also resulted into a deficit result of the Brazilian trade balance
account, with the Chinese economic slowdown (and thus the drop in 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
trade with the country), Argentina was expected to be the major (+) (+) (+) (+) (+) (+) (+) (+) (+) (+)
Brazilian partner this year.
Results Exports Imports

Brasil – USA Brasil – China 44 46


US$ Billions 41 41
34
36 35 US$ Billions 37 37
32 34
33
27 27 27 27 31
25 25 26 26 25
23 26
19 20 19
20 21
15 16
13 17 16
13
11
7 5 8 8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(+) (+) (+) (+) (-) (-) (-) (-) (-) (-)
(+) (+) (-) (-) (+) (+) (+) (+) (+) (+)
Results
Exports Imports Results
Exports Imports
28 Source: Research - Deloitte (based on MDIC data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Income and services
Foreign sector US$ Billions – Account balance
Income and services (49)
Services
Serviços (47) (47)
In 2012, and for the first time since 2000 the balance of Income
Rendas (41) (40) (41) (40) (40)
services recorded levels higher than income. Thus (38)
(34) (35)
reflecting the output of related resources, basically to (31)
services more than revenues sent abroad, a situation that (29)
(27)
remained in the last two years.
(19)
(17)
This results show a high level on international travel (13)
(10)
(outflow of US$ 18.7 billion) and in equipment rental
service delivery (US$ 22.7 billion).

Largest accounts of net services 2006 2007 2008 2009 2010 2011 2012 2013 2014
US$ Billions
-

(5.0)

(10.0)
International
Viagens travel
internacionais
International travel
(15.0) IT services e informação
Computação
Royalties e and licenses
licenças
-18.7
(20.0) Equipment
Aluguel rental
de equipamentos
Insurances
Seguros
(25.0) -22.7
2006 2007 2008 2009 2010 2011 2012 2013 2014
29 Source: Research - Deloitte (based on Central Bank). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Foreign sector
Balance of payments
The current account recorded in 2014 a US$ 90 billion deficit in total.

This negative result, however, was offset by the increase of financial transactions within the Brazilian accounts (primarily in fixed income
securities), which added to the significant increase in the sale of services and income abroad, thus overlapping the bad result of the trade
balance (deficit) and managing the balance of payments to close the year with a positive result (US$ 10.8 billion), as opposed to 2013 (when
it had a US$ -5.9 billion deficit).

Balance of Payments
US$ Billions

2009 2010 2011 2012 2013 2014


Trade balance 25,3 20,3 29,7 19,4 2,4 -0,3
Net services and incomes -52,9 -70,6 -85,2 -76,5 -86,8 -88,3
Unilateral transfers 3,3 2,8 2,9 2,8 3,4 1,9
Current account -24,3 -47,5 -52,6 -54,2 -81,1 -90,3
Capital and financial account 71,3 100,1 111,9 72,7 74,2 97,7
Errors and omissions -0,3 -3,5 -0,6 0,3 0,9 -1,3
Balance results 46,7 49,1 58,6 18,9 -5,9 10,8
Note 1. Errors and omissions: The exit of credit and debit released in the balance of payments comes from various sources of information, generating in practice, a net-zero. The main reason lies in the discrepancies of
different temporal data sources used. Thus, it becomes necessary to launch of a balancing data of accounts. Errors and omissions lend themselves therefore to compensate for any overestimation or underestimation of
registered components.

30 Source: Research - Deloitte (based on Central Bank data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
FDI Inflow
Foreign sector Share by country - 2014
19% 20%
Foreign direct investment (FDI)
Netherlands
FDI showed a slight decrease in 2014 compared with the previous USA
Luxembourg 2%
year, leading to Brazil's fall in the ranking of largest global FDI inflow 3%
Spain
(from the 5th position to the 7th). Japan 3%
Portugal 16%
Nevertheless, the Central Bank and the EIU expect that the FDI France 5%
inside the country remains representing 2.9% of GDP from 2013 to Switzerland
2017. Meaning that the inflow of foreign capital should remain at United Kingdom 6%
Germany
about US$ 60 billion in the coming years Others 8% 9%
9%
Foreign Direct Investment (FDI)
US$ Billions
67 Share by segment - 2014
65 64 62
Trade 10%
Telecommunications
48 Financial activities 9%
45 Vehicles and autoparts 35%
Chemicals
33 35 Metallurgy
8%
Chemicals
26 Oil and gas extraction
22
17 18 19 Mining 5%
15 Insurances
10 Real estate 3% 4%
Food 3%
IT Equipments 3% 4%
Others 4% 4% 4% 4%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
31 Source: Research - Deloitte (based on Central Bank data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
BDI Outflow
Foreign sector Share by country - 2014
1% 4%
Brazilian Direct Investment (BDI) Fiscal Paradises
Portugal 8%
44%
The Brazilian Direct Investment abroad showed a growth USA
resumption during 2014. This result is also a reflection of the Austria
performance of national companies’ investments through the year. Luxembourg 9%
Switzerland
Notwithstanding, the high % share of the country outflow Spain
continues to be inside Fiscal Paradises (mainly represented by: Chile
Argentina 12%
Cayman Islands, Bahamas, British Virgin Islands, Panama,
Uruguay
Bermuda and Monaco).
Others
18%
Brazilian Direct Investment (BDI)
Capital outflow - US$ Billions
Inverted signal (Debt) Share by segment - 2014
30.2
8%
Financial Activities
1%
24.4 23.5 24.1 34%
Non-financial holding companies 3%
Telecom 6%
18.0 18.2
Mining support activities
13.7 Metallurgy
12.1 8%
Mining
7.8 8.5 Trade
3.9 Oil products
2.5 2.8 Food
Vehicles 18%
2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Other 19%
32 Source: Research - Deloitte (based on Central Bank data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Money market

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33 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Credit loans
Money market
Credit / GDP (%) 59.0
Credit loans 53.9 56.0
49.1
In 2013 and 2014, credit operations grew more moderately
compared with the expansion at the beginning of former president 41.3 41.8 41.2
Lula’s government in 2003, mainly driven by loans taken by
individuals. 32.7
29.4
The total credit loans in Brazil during 2014 reached R$ 3.0 trillion,
leading to an increase in the GDP ratio to 59% of the entire value
of the Brazilian nominal revenue during the year.
2006 2007 2008 2009 2010 2011 2012 2013 2014

Credit Operations in Brazil


R$ Billions
3,022
2,715
2,368
2,034
1,706
1,227 1,414
936
733

2006 2007 2008 2009 2010 2011 2012 2013 2014


Source: Research - Deloitte (based on Central Bank data)
34 Note 1. Credit operations from public and private sector. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Money market Default
Credit loans % end of the month
6.0
The corporate default rate increased 0.2 5.0
percentage points compared with the end 4.0
of last year, reaching 2.0% in December
3.0
2014, a marginal index if considered the
2.0
big directed credit values.
1.0
The individual default rate, however, 0.0
continues to fall, reaching 4.2% at the
end of the year.

Corporate Individual
Average interest rate for Corporations and Individuals
% variation at the end of the month
50 Pessoa Física
Individual
45
Pessoa Jurídica
Corporate
40
35
30
25
20
15
10
5
2009 2010 2011 2012 2013 2014 Dez/14
Source: Research - Deloitte (based on Central Bank data)
35 Note 1. Credit operations from public and private sector. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Money market Credit loans by type
% Composition
Credit loans
19%
The loan approvals had an increase growth in recent years,
mainly promoted to combat the recent economic situation coupled Financiamento BNDES
BNDES
with the great immersion of a new demographic population in the Imobiliário
Real estate
45%
middle class, a larger access to credit was given for the purchase Veículos
Vehicles
of vehicles and households, especially for individuals. 16% Rural
Companies continue with the main credit facility, the BNDES, Credit cards
Cartão de crédito
continues to contribute with the highest gross value of all Brazilian Products acquisitions
Aquisição de bens
installment system. Outros
Others
7%
1% 5% 7%
Credit concession by type
US$ Billions

19
17 Vehicles Real estate
15
13
11
9
7
5

Source: Research - Deloitte (based on Central Bank data)


36 Note 1. Credit operations from public and private sector. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Capital market

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Global stock market
Capital market Index: 01/02/2010 = 100
170
Stock exchange
150
The decline of Ibovespa index can be observed both in its
130
variations within the country since 2012: (i) Where most recently
the case of the oil and mining listed companies, which held much 110
of the Ibovespa market value, had a fall over his index to about 90
52,000 points. 70
(ii) We can also examine the effect taken into account a index 100 50
basis in 2010, and see that the European stock markets and North 04/01/2010 29/10/2010 04/08/2011 29/05/12 01/04/13 03/12/2013 31/12/2014
31/12/2014
19/08/2014
31/12/2014
31/12/2014
America, even after crisis surpassed the average value of
Ibovespa Dow Jones Euronext 100 Shanghai
Brazilian growth.
Fontes: * medido pelo EMBI+ do JP
Fonte: Banco
Ibovespa index Fall of the US$
December/2014
value with the
Thousand points increase of the “Seesaw Effect”
Pessimism in
country interest rate. reported data from Low prices and average volatility
70 on listed companies create a
Thousands

Polls in Brazilian both the Brazilian


election predict a huge wave of speculation and buy
and the US economy
65 Announcement of the end of US’ QE / sell orders inside the market
second Round. by BC and FED.

60

55

50 Falling prices of oil, gas and


mining listed companies
45 Huge decline on
oil companies
price value.
40
02/01/2012 11/05/2012 06/09/2012 17/01/2013 21/05/2013 17/09/2013 17/01/2014 20/05/2014 16/09/2014 31/12/2014
Fontes:
38 Banco Central - Research (based on BM&FBovespa, IPEA data and Shanghai Exchange Market data) . * medido©2015
peloDeloitte
EMBI+ doTohmatsu.
Touche JP MorganTodos os direitos reservados.
Fonte: Banco Central e EMBI
Source: Deloitte
Type of registered offers
5% 1%
Capital market 19%
14%
Stock exchange 2007
3%
The number of IPOs in Brazil has fallen considerably since the start of the
unstable economic scenario that started two years ago. 12%
However, Brazil has a very interesting scenario for a restore on the emissions.
According to Edemir Pinto, BM&FBovespa president in an interview for the 4%
Financial Times, Brazil has about 60 IPOs ready to be launched in 27%
8%
the market is the political and economic situation remain stable 7%
throughout the year. Stocks BDR
Audiovisual certificate CRI
Debentures Promissory notes
Public offering and BM&FBovespa market value evolution FIDC FIP
Real estate bonds Other shares and bonds
R$ Billions
3%1%
160 12 1.8 15%

Millions
140 1.6
120 1.4 4%
1.2
2014
100
1.0
80 Market value 10%
140 0.8
60 47%
0.6
40 52
11 0.4 7%
8 7
20 1 1 0.2
15 26 21 17 15
0 11 8 3 0.0
2007 2008 2009 2010 2011 2012 2013 2014 13%
IPOs 64 4 5 10 11 3 15 2 Stocks Subscription bonus Audiovisual certificate
Subsequent 12 9 19 15 14 10 9 1 CRI Debentures FIDC
Offers
FIP Real estate bonds
39 Source: Deloitte - Research (based on BM&FBovespa, CVM and Thomson data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Brazilian portfolio evolution
Capital market US$ Billions
Stock exchange 32
Fixed
Rendaincome
Fixa Açõesmarket
Stock

Much of the decline of investments of IPOs emissions and the 24 25


Brazilian stock market in general is due the recently lack of in the
20
entire political and economic scenario inside the country.
15
This can be shown by the increase in fixed income investments (less 12
volatile than the stock market), as well as the significant results of 10 11
the National Treasury and Government bonds through 2014. 6 5 6

0
Best type of investments in 2014
Index (01/02/14) = 100 2009 2010 2011 2012 2013 2014

120

110

100

90

80
1/2/2014 2/2/2014 3/2/2014 4/2/2014 5/2/2014 6/2/2014 7/2/2014 8/2/2014 9/2/2014 10/2/2014 11/2/2014 12/2/2014

Fixed income (CDI bonds) US$ (daily price) Stock market (Ibovespa index)
Gold (daily price) Savings account (daily yield)

40 Source: Deloitte - Research (based on BM&FBovespa and Economatica data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Capital market
Merger & Acquisition

The fall in the number of M&A in 2014 (893) compared to 2013 (938) shows the current economic slowdown of the Brazilian
economy. This decrease should be maintained through the entire year of 2015, as business confidence will focus on identifying
speculation around the new government's direction and how this will impact over the investors and company owners’ business.

Merger and Acquisitions


Number of operations
938
872 893

588

329

2010 2011 2012 2013 2014

Source: Deloitte - Research (based on press, TTR and Thomson data). Includes Mergers, Acquisitions, Partnerships, Joint Ventures, OPA, Minority,
41 PE and VC. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Public sector

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Public sector net debt
Public sector Central government, state and city governments, state owned
Net debt and primary surplus companies - % GDP Main reasons that justify increased debt over GDP during this period:
- Renegotiation of state government’s debts
- Debts recognitions
The Government is moving into the direction of an adoption - Interest rate increase

for primary surplus in the entire balance (balance sheet 51 45 39 42 35 37


48 47 39 37 34
results before payment of debts and interest), this view 8 3
appears to be in line with the new competitiveness focus of
45 48 53 49 51 49 49 49 49 52
the country, adopting crucial measures to remove 42
infrastructure bottlenecks.
-1 -7 -11 -9 -10 -13 -14 -15 -15
However, the primary balance reached a deficit in their
accounts at the end of 2014, something that had not
happened since November 1998.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

National
Dívida net debt
interna líquida foreign net debt
Dívida externa líquida
Public sector nominal and primary surplus
Central government, state and city governments, state owned companies - % GDP
(12 months accumulated) Primary
Primário
Nominal
3.8 4.1 4.1
2.8 3.1 2.4
2.1 1.9
-0.6
-2.2 -1.5 -2.5
-3.4 -3.3 -2.5 -2.6 -3.3

-6.7
2006 2007 2008 2009 2010 2011 2012 2013 2014
43 Source: Deloitte - Research (based on Central Bank data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Public sector 24% 21%
Tax and fees ICMS
IR
The Brazilian federal revenue has grown substantially in the last 15 years INSS
cycle (an increase of 419% from 2010 to 2014). COFINS 2%
Taxes levied on goods (ICMS) and the incidence of income tax on both 2%
FGTS
individuals and corporations (IR) were the plots that grew the most in overall IPI 17%
6%
taxation value.
IOF
The two are also the two main government revenues, with almost 40% of the Others
total. 11%
17%
Brazil’s annual tax revenue
R$ Billions
1,101 1,147
992
939
800
676 690
600
515

2006 2007 2008 2009 2010 2011 2012 2013 2014


44 Source: Deloitte - Research (based on Federal reserve data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Difference between the incidence of taxes and benefits in each country
Public sector IRBES index (1) – Return to the society welfare
50
Tax and fees 45 0
40 20
35 40
But regarding the use of the tax for

% GDP in taxes
30 60
the benefit of the country, Brazil still 25 80
has a very large gap if compared with 20 100
other countries, being one of the 15
120
highest rates of GDP (~35%) and 10
140
5 IRBES GAP
lower use in public services benefits. 160
0
(Appearing only in the 30th position of the IRBES 180
index, calculated by the OECD)

Total annual tax on GDP


% GDP
40%
FHC 1 FHC 2 Lula 1 Lula 2 Dilma
35%

30%

25%

20%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Deloitte - Research (based on Federal Reserve, OECD and UN). Note 1: The IRBES are the results from the sum of the tax burden, weighted
45 percentage for the importance of this parameter, with the HDI, equally weighted. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Investments

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PAC
Investments
Disbursements made by PAC I and PAC II – 2007-2014
Investment plans
R$ Billions
68.0
Brazilian Infrastructure evolution 53.7
% GDP
39.3
28.0
5,4 17.9
22.1
11.3
0.5 7.3
Água
Watereand
Saneamento
sanitation
Transportes
Transports
2007 2008 2009 2010 2011 2012 2013 *2014
Telecomunicações
Telecom
2.0 3,6 Companies
0.2
Eletricidade
Electricity
Company Value (R$ Billions)
2,7 2,6 Petrobras 236,7
0.8 1.5 0.2 0.2 2,3 2,3 2,3 2,2 2,1 Eletrobras
Furnas
52,4
40,0
0.6 0.2 0.2 0.2 0.2 Vale 35,7
0.6 0.2 Trump Organization / EVEN / Salamanca / MRPI 0,81
0.6 0.6 0.6 0.6
0.4 0.6 Louis Dreyfus Commodities (LDC) 0,77
1.1 Vanguarda Agro (Gávea Investimentos - JP Morgan) 0,26
1.1 0.6 0.5 0.6 Grupo Ultrapar 0,19
2.1 0.6 0.6 Bridgestone / Firestone 0,16
1.5 Sumitomo 0,16
0.8 0.9 1.0 0.9 0.8 ECO 0,15
0.7 0.7
Bresco 0,14
Prebuild 0,11
1970 1980 1990 2000 2010 2011 2012 2013 *2014 Biourja Trending 0,11
Source: Renai and companies websites.

47 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.


Source: Research - Deloitte (based on National Treasure, press, IPEA/World Bank/ BNDES - *Pezco Microanalysis and National Treasure expectations).
Agriculture

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Agribusiness: Exports
Agriculture 2014, % Composition
2% 4%
3%
3%
Soy Complex 3%
Soy complex continue as the main export product of the Brazilian Meat
Agribusiness, with 37% of the total in 2014, followed by beef (20%); sugar and 8% 37%
Sugar
alcohol with 12%, which has been decreasing its share since 2011 (from 19% Paper and Pulp
to 12%). Coffee
Leather 8%
Agricultural production has also increased substantially over the last 10 years, Tobacco
especially sugar cane, which accounts for about 70% of the production of the Lumber
last four season crops, with expected production of 650 thousand grains for Orange
Others 12%
2015.
20%
Gross production value of agriculture and livestock
Position and share of Brazilian grain production
US$ Billions globally
500 452 464 476
450
372 385
400 1st
331 319 331
350 292 2nd
300 258
250
1st
200 2nd
150 3rd
100 3rd 4th 5th
50
0 21 35 30 17 15 8 3 7
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Sugar Coffee Soy Beef Poultry Maize Pork Cotton
Agricultura
Agriculture Pecuária
Livestock Agropecuária
Agribusiness
49 Source: Research - Deloitte (based on MDIC, USDA and Conab data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Industry

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Industry

The low growth of global economic activity especially Industrial production evolution
for the Brazilian market has put the Brazilian industry Index Sep/2008 = 100
"steps back" inside the international competition.

In this sense, even with the growth of the Brazilian 105


domestic consumption, domestic production had its -5.2%
physical production almost stagnant. 100
These results reflected directly with the difficulty with
95
the international results in terms of competitiveness.
Mainly with automotive, metallurgy and chemical
industries. 90 Financial crisis

85
Industry Confidence Index
120 80
115
110
105 75
100
95 Dec/2014
90 70
85
80
75
70

51 Source: Research - Deloitte (based on IBGE and FGV data). Seasonally adjusted production and sales. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
2%
3%
Metallurgy 4%
Industry % Global share in steel production
4%

5%
Chemicals
2004 5%
7% 2014
Chemical trade balance Exportações
Exports 26% China
China 18%
US$ Billions 28% Japan
Japão
49%
Importações
Imports
50 USA
EUA
2%
40
India 2%
Russia
Rússia 3%
30 South
CoreiaKorea
do Sul 4%
20 4% Germany
Alemanha
11% 4%
10 3% Brazil
Brasil
Ukraine
Ucrânia 5%
0 4%
Others
Outros 5%
5% 10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 6% 3% 7%
 Maintenance of increased imports  Brazil maintains its same global share even with the fall of 3m tons.

Automotive Paper and pulp


Brazilian automotive production Paper and pulp production
Million ton Paper Pulp
Millions of units
3.7 16.5
3.1 3.1 3.4 3.4 3.4 3.1 15.1
2.4 2.8 12.7 13.3
14.2 13.9 14.0
12.0
10.7 10.0 10.2 10.3 10.4 10.4
8.7 9.0 9.4 9.4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014

 Decrease in the production and storage of vehicles through the end of the IPI.  Increased production and exports – valued stock market for the sector
companies
52 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Source: Research - Deloitte (based on MDIC, Anfavea, World Steel and Ibá data)
Industry Oil and gas
Mining National production of oil
Million barrels
Iron ore exports
US$ Billions - FOB
823
41.8 750 768 754 738
32.5 712
28.9 30.9 663
25.8 638
16.5 629
8.9 10.6 13.2
2006 2007 2008 2009 2010 2011 2012 2013 2014
2006 2007 2008 2009 2010 2011 2012 2013 2014
 Despite the growing production, Brazil suffers from low oil prices and
 Drop in exports of iron ore due to Chinese economic situation. management problems with its main producer.

Civil construction Energy


Household deficit Installed capacity - gW 137
Households without occupation – in Millions 127
117 121
11.7 113
8.9 9.9 107
7.5 8.1 100 103
6.3 6.3 6.0 6.0 6.9 96
5.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 (*)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
 Implementation of new technologies, such as wind power; but there will be an
 Increased housing deficit, real estate prices still high. increase into energy prices and possible blackouts.
53 (*) Expectation ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Source: Research - Deloitte (based on MDIC, ANP, Aneel and Fundação João Pinheiro data)
Services

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Services Retail revenue evolution
R$ Billions
The retail sales have shown a tendency to growth in 356 353
348
recent years. 329 328
Among the reasons that boosted the industry are mainly
255 255
increased income of credit, even after the complicated
214
scenario in recent years.
174
Other important reasons was the increase in the number
of formal jobs.

Retail sales evolution 2006 2007 2008 2009 2010 2011 2012 2013 2014
Index Sep/2008 = 100
150
140 Brasil EUA
Brazil USA
130
120
110
100
90
80
Dec/2014
70
Dez 2004 Dez 2005 Dez 2006 Dez 2007 Dez 2008 Dez 2009 Dez 2010 Dez 2011 Dez 2012 Dez 2013 Dez 2014 Dez

55 Source: Research - Deloitte (based on IBGE, US Census Bureau and Euromonitor data). Seasonally adjusted. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
THL
Services
Services, agriculture and industry GDP Agriculture
% variation yoy. Industry 2014 WC Investments R$ 25,6 bn
Services
12.0

8.0 +691 thousand tourists Tourism legacy


4.0

0.0

-4.0
Rio 2016 Investments R$ 36,7 bn
-8.0  One of the highlights of 2014 was the increased tourism in Brazil due the World
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cup, which generated a R$797 million revenue just in June/July.

Healthcare Technology, Media and Telecom


Brazilian healthcare revenue Municipalities covered by 3G in Brazil
R$ Billions
80 3,554 3,827
70 3,293
54 63 2,625
40 46
32 37 1,287
27 711
448

2008 2009 2010 2011 2012 2013 2014


2006 2007 2008 2009 2010 2011 2012 2013 2014
 Increased growth due a fierce investment inside the sector, especially with generic  ~70% of Brazilian municipalities already have 3G technology, which continues
drugs and health plans. with a moderate expansion, nevertheless some already are adopting 4G
technology.
56 Source: Research - Deloitte (based on Euromonitor, MTUR, Teleco, Abia and Portal da Copa data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Global scenario

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USA

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USA Industrial production x Capacity utilization
Production (% variation end of the year) Capacity utilization (%)
Much of the analysis of the US economy must be 10 85
focused in the results of 2014, when the country got its 80 81 5.7
3.3 3.8 4.2
most satisfactory scenario since the financial crisis; 5 2.2 2.5 78 2.9 80
particularly given the heated industrial production, which 78 79
0 76 77 75
was intensified by all sectors.
69 74
This resulted in a substantial drop in unemployment, led -5 -3.4 70
by increased employment, higher capacity utilization and
-10 65
a large increase in domestic demand.
-11.3
-15 60
2006 2007 2008 2009 2010 2011 2012 2013 2014
USA – Employment indicators
Monthly variation
Creation of new jobs (variation in 1000)
7% 500
6.7% 6.7% Unemployment rate
6.6% 6.6%
400
6.3%
6.2% 6.2%
6.1% 6.1% 300
6% 5.9%
5.8%
5.7% 200
5.6%

100
84 144 222 203 304 229 267 243 203 271 261 353 252
5% 0
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

59 Source: Research - Deloitte (based on Bacen/Bloomberg and Federal Reserve). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
USA Nominal GDP
US$ Trillions

The result of the US GDP in the third quarter of 2014 gives


evidence that the country continues its recovery trend. 20.7
19.7
Considering the last five quarters, the average rate of the US 18.9
economy growth reached 2.8%. 18.2
17.4
16.8
Estimates for 2015 show that the recovery of the US economy 16.2
15.5
will have an impact over the World economy, the growth of the 14.5 14.7 14.4 15.0
United States has to compensate for the slowdown in 13.9
China that goes through a process of deceleration.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Price index
% variation (end of the year) Real GDP
% variation yoy.

4.1 3.4
2.7 2.5 2.3 2.2 2.4 2.5 2.4 2.6
2.8 3.0 1.8 1.6
2.3 2.4 2.2 -0.3
1.8 1.5 1.8
2.5
1.4 0.7
-2.8
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

60 Source: Research - Deloitte (based on EIU data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
USA USA – GDP, Money market interest rates and Federal bonds
interest rates
With the end of the US economy adjustment plan (QE - % variation yoy.
Quantitative Easing) announced in October 2014, it is expected a
(PIB)
GDP Produto Interno Bruto
short-term recovery of the country economy through 2015,
indicating that the country might start to reduce its interest rates. Taxa de bonds
Federal Juros dos Titulos
interest rateFederais
Taxa
Moneydemarket
Juros básicas dos Estados Unidos
interest rate
This also helps the global economy during the weakness of the 6
countries in Europe, China and Japan, leading to expanding 5.3
global demand for dollars causing the devaluation of national 5 4.6
4.3 4.3
currencies.
4 4.8 3.7
4.3 3.3 3.2
Conduct of the national currencies against the US$ dollar 4.3 2.8
3 2.4 2.5
US Dollar / National currency - Index 01/01/14=100
2
2.3
130 Real-Br Peso-Mex Yuan-Ch 1.8
Yen-Jap Euro-Eu Rand-Afr 1 0.25
0.25
115 0

-1
100
-2

-3
85
-4
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

61 Source: Deloitte Research - (based on Federal Reserve and Exchange rates data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Europe

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62 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Europe
Euro Zone
(19 countries)
European Union

United Kingdom

Czech Republic

Austria, Belgium, Cyprus, Hungary


Estonia, Finland, France,
Germany, Greece, Ireland,
Denmark
Italy, Latvia, Lithuania,
Luxembourg, Malta,
Netherlands, Portugal, Sweden
Slovakia, Slovenia, Spain.
Bulgaria

Romania European Union


(28 countries)
Croatia Poland

63 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.


Europe Nominal GDP
US$ Trillions European Union Euro Zone
After threatening a risk of default in the public accounts throughout
the entire year of 2012. Greece, Portugal, Ireland and the other 20 21
19 18 19 20
PIIGS (Italy and Spain), showed a slight recovery in their internal 17 17 17 18 17 18
15 15
results, mainly by economic plans led by the "troika“, the European 15 14 13 14
12 13 13 13
Commission, European Central Bank and International Monetary 12 12 12
11
Fund.
This culminated in important and very considerable recovery results
of the PIIGS in 2014, which influenced directly on various issues 5 5 6 6 6
4 5 5 4 4 5 5 5
related to the “Orthodox Economic-Tripod”: public accounts,
exchange rate’s appreciation and nominal GDP growth with inflation 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
and interest adjustments.
Real GDP – Euro Zone
Exchange rate – Euro/US$ % Variation yoy.
End of the year
0.85 3.3 3.0
0.84
0.83
0.80 2.0 1.6 1.3 1.7 1.7 1.6
0.77 0.82 0.8
0.76 0.76 0.4
0.75 -0.7 -0.4
0.72 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0.73
0.69
0.68
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -4.5

64 Source: Research - Deloitte (based on EIU and IMF data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Price index – Euro Zone
Europe % variation y.y.

The interest rate and inflation reduction, as shown in the


previous slide helped a strong recovery in the Euro Zone, 3.1
which had repercussions on the entire European Union. 2.8
2.2 2.2
In European interest rate chart, we can see the trend of 1.6 1.6
upraise in the interest rated led by the European Central 0.9 1.3 1.3
1.9 0.8 1.0
Bank for the next four years, mainly by the beginning of 0.5
the economic recovery in the region.

Interest rates – European Central Bank 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% variation yoy.
Interest rates into selected countries / regions
% variation yoy.
Scenario 2: Economic disparity
Scenario 1: Scenario 5: US and
150% Large gap in the variation of interest rates
Financial Crisis Europe recovery
4.6 between consolidate and emerging Scenario 4:
Chinese slowdown
4.3 Fall in the global markets. European Crisis
interest rates and weak economic
100% Second global
situation in Brazil.
3.1 interest rates fall.

50%
1.9
1.2 1.4
1.1 0%
0.8
0.6
0.2 0.2 0.1 0.4 -50%
Scenario 3:
Recovery of Emerging
-100% markets
2009 2010 2011 2012 2013 2014

Brasil
Brazil China EUA
USA Europe
Europa
65 Source: Research - Deloitte (based on EIU and IMF data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Net debt / GDP
Europe % Participation
175 171
Looking at the net debt results, we can still see that 2013 2014
there is room for improvement within the PIIGS 128 134
125 129 120 112
(Portugal, Ireland, Italy, Greece and Spain),
something that could be pursued with increasing 92 98 92 96 100% GDP
domestic and industrial credit and incentive tourism 77 75 74
in the region (as happened in 2014), this has 40
already reduced the unemployment rates in these
countries.
Portugal Italy Ireland Greece Spain Germany France UK
% variation of domestic credit of selected
countries
Portugal
Unemployment
Portugal Italy Ireland Greece
5 % variation (end of the year)
Spain Germany France UK
UK 0 Italy
30
-5
-10 25
-15
20
France -20 Ireland
15

10

Germany Greece 5

0
Spain 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2012 2013 2014
66 Source: Research - Deloitte (based on EIU and IMF data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Latin America

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67 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Latin American countries share on region’s GDP
Latin America % Participation

12%
The deceleration of Latin American Real GDP (2.4% to 1.0%) has
a more cyclical nature than structural. But it was also affected by 4% Brazil
the recent slowdown in emerging countries. Mexico
38%
9% Argentina
However, the region is resistant to possible recession in
developed countries (double-dip recession), thanks to strong Colombia
economic fundamentals and a more concise domestic demand,
6% Venezuela
through access to credit and the expansion of the workforce. But Chile
inflation, however, begins to expand dramatically in Venezuela, Others
Brazil, Mexico and Argentina. 9%
Consumer prices
22%
% variation (end of the year)
10.4 Nominal GDP
US$ Trillions
9.3
8.1 8.6 7.1
6.4 6.7
7.8 6.0 5.8 5.9 5.8 6.1
7.3 7.2 5.3
6.8 4.7
6.5 6.5 4.2 4.1
3.6

5.6
5.1 4.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
68 Source: Research - Deloitte (based on EIU, IMF and Cepal data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Unemployment rate
Latin America % Population

16
Brazil is expected to lose share inside Latin America’s
market. According to The Economist, the forecast for 2018 14
is that the country's participation in the region economy falls 12
from 48% to 38%, mainly due to Mexican and Colombian 10
rise in the period. 8
6
Even with the reduction in the volume of the Nominal GDP 4
participation in the continent, Brazil will continue to have a 2
strong status regarding the inflow foreign capital and market 0
significance inside the region. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Real GDP Argentina Brazil Chile Colombia


% Variation (end of the year) Mexico Peru Uruguay Venezuela
16
14
12
10
8
6
4
2
0
2012 2013 2014 2015 2016 2017 2018
Argentina Brazil Chile Colombia Mexico Peru Uruguay Venezuela

69 Source: Research - Deloitte (based on EIU data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
China

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China
Nominal GDP
The Chinese economic scenario has shown a decrease in their real
US$ Trillions
GDP growth in the last three quarters. Even so, the growth base is
still around 7%, closing the last year at 7.3%.
14.5
13.5
This result has led China to take economic and fiscal stimulus 12.4
11.2
measures to "re-leverage" its economy, and has decreased the level 9.5 10.4
8.4
of investment in construction and infrastructure, which has not 7.3
5.1 5.9
generated the expectation of employment, production nor the strong 4.5
2.8 3.5
recovery foreign trade focused on the returned value generation
expected at the beginning of the decade.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Consumer prices Real GDP


% Variation (end of the year) % variation yoy.

6.5
14.2
4.6 12.7
4.1
3.2 3.5 3.4
2.5 2.5 10.4
1.9 2.4 9.6 9.2 9.3
1.2 1.4
2.8 7.7 7.7 7.3 7.1 6.7 6.3 6.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

71 Source: Research - Deloitte (based on EIU data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Investments / GDP
China % Participation
The high leverage of Chinese investments in GDP participation 46
(at around 46% of the total) mainly caused by the falling
interest rates uprising in 2009, and the strength to infrastructural 35
growth inside the country has proven that this high number 31
actually presents unsatisfactory results.
28 28 28
25 25 24
22 22
Since this policy was taken, large buildings have become 19 18 17
16
abandoned, companies are loaded with over-stocked 12
production and population concentration has created a high
density in only a few cities, such as Beijing, Guangzhou and
Shanghai.
Interest rates
% Variation (end of the year)
New South
China
5.3 5.0 5.0 5.2 5.5
4.6 659(1) thousand
4.3 4.2 4.4
3.4 2.7 m2 abandoned
2.7
1.7 The “Phantom
Shopping” is a
sample of negative
results caused by
high investment on
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GDP.

72 Source: Research - Deloitte (based on EIU and Chinese press News data). Note 1: 7,093 square feets. ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Chinese demographic pyramid - 2014
China Age

Another critical situation that the country has presented is a demographic deficit
Male Female
of 5-19 years youngsters. The government began to worry about a possible
decrease in the labor force for the next decade, which is already affecting
productivity and could reduce the strong growth prompted by China.
With this, the country is beginning to signing a possibility in an "opening“
situation for couples to have another child. Policy adopted in the early 90s inside
the country to contain the Malthusian population explosion.

China – Work force


Millions of people Population Gap Millions

799 799 800 799 798 Unemployment rate and productivity


796 796 % variation (end of the year)
794
792
791 Unemplyment rate Productivity rate
787
7.0 15
783
13
781 6.5
778 11
6.0
774 9
5.5 7
5.0 5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

73 Source: Research - Deloitte (based on EIU and CIA World Factbook data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
India

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74 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
India
Nominal GDP
The growth rate of India is above the world average, both in the US$ Trillions
evolution of real GDP (6.0% in 2014 and expected 6.6% in 2015),
and in the evolution of its Nominal GDP, which is expected to triple 3.5
in 10 years size, already appearing among the 10 largest economies 3.0
in the world. 2.6
2.1 2.2
1.7 1.9 1.9 1.9
The good results of the Indian economy contrast with most other
1.2 1.2 1.4
BRIC economies, mainly because both India and Brazil are not 0.9
linked by only a single commodity such as Russia (petroleum).

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Consumer prices
% Variation (end of the year) Real GDP
11.8 % variation yoy.

10.4
9.7
9.4 9.8 10.2
9.3
8.0 8.3
8.3
7.6 7.6 7.3
6.7 6.6 6.7 6.5 6.5
6.3 6.2 6.1 6.0
6.9 4.7 5.0
4.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

75 Fonte: Research - Deloitte (baseado em dados do EIU) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
(1)
GDP PPP (1) country ranking
India US$ Millions
2014
The Indian Growth demonstrates two important scenarios of its emerging economy.
China 18.160
First, India stands out for its importance in the export of services. His expertise in IT,
USA 17.392
Information Technology and Telecommunications are essential to the use of
India 7.276
outsourcing inside the US and Europe.
Japan 4.688
(If India appears as the 6th largest economy in service credit exports, and the US 1st, it Germany 3.651
owes much to the hand of Indian work, where 66% are expatriates in the country, Russia 3.528
and 7% of all CEOs of Silicon Valley are Indians). Brazil 3.059
UK 2.555
The second factor is the easy public access to the Indian food basket, much cheaper 2.547
Indonesia
than in neighboring or correlated emerging countries. 2.523
France

Exports of services - Credit


US$ Billions (end of the year)
Big Mac Index(2)
300 1 US$ 100
252 2 Bic Mac amount that can be bought in
250 222 3
198 selected countries with the same value.
200 175 4
162 5
150
104 117
139 146 149 6 61 40
87 92 7
100 70 8
9
23 17
50
10 Source: Research – Deloitte (based on The Economist Big Mac Index).
0 11 (1) GDP PPP = GDP purchasing power parity.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (2) Big Mac Index = s an index calculated on the price of Big Mac in over 100
countries, with the aim of measuring the value of the living cost. Made by The
Exports India position in the service provide global ranking Economist since 1986.

76 Source: Research - Deloitte (based on EIU data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Russia

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77 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Russia
Nominal GDP
The Russian scenario presents a substantial decline in their US$ Trillions
accounts and GDP forecast than a few years ago, when they were
seen as one of the most promising BRIC together with Brazil. 2.0 2.1
1.9 1.9 1.9
Especially if taken into account that the country was the main 1.8
1.7 1.6
supplier of oil and natural gas to Europe. 1.5 1.4
1.3 1.2
With a GDP decline scenario for 2014 and 2015, an inflationary 1.0
increase of almost 4% for the end of the year and a slow recovery
after this period, Russia starts a backdrop of uncertainty as to
where their economy is leading to; mainly caused by two key
factors: (1) oil prices and (2) War with Ukraine.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Consumer prices Real GDP


% Variation (end of the year) % Variation yoy.
13.3
10.9 8.0 9.1
11.9
5.5 4.3 3.4
8.8 4.1 2.5
9.2 1.3 2.0
9.0 0.6 0.5
8.8

6.6 6.5
6.1 -3.5
5.6
5.0 4.9 -7.2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

78 Source: Research - Deloitte (based on EIU data) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Evolution of oil imports and shale gas production
Russia in the World (Index 2007 = 100).

The first factor quoted before is the large recent fall in oil prices, 1000
as Russia is an economy directly correlated with this commodity, Oil imports de petróleo
Importação
800
the country has seen the value of the ruble plummet along with
Shale gas de
Produção production
gás de xisto
oil prices, as well as an increase in stock and reduction of 600
international trade material, driven by a large global trade on
shale gas led by the USA. 400
The country still manages some stability with gas prices, but may
200
suffer from the "Dutch disease" (1) in the next decade.
(1) Dutch-disease: is an economic term that refers
to the relationship between the export of natural 0
resources and the decline of the manufacturing
2007 2008 2009 2010 2011 2012 2013
Depreciation of the ruble linked sector, mainly caused by an extreme focus in an
economy based on only one natural resource.

to the oil price drop


Oil market in Russia – Thousand barrels per day
140 0.05
120 10,500
100 0.04
80 8,500
0.03
60
40 6,500
0.02
20
4,500
0 0.01
2,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Oil - US$ per barrel RUB / US$ Production Exports Stock

79 Source: Research - Deloitte (based on EIU, US EIA, IEA, Bank of Russia and Index Mundi data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Russia Key regions in the
Russia-Ukraine War
The second major factor was the recent
war involving Russia and Ukraine due to Separatists
the annexation of the Crimea by the
Russians. Majority ethnic Russian
regions in favor of
The sanctions imposed by the US and EU, separation
mainly on the country's major Crimea  Situation to
conglomerates have caused a reduction in be defined
the international market, policy and
institutional relations, leading to a much
larger drop in GDP than expected.

Nominal GDP
US$ Trillions
3.0
2.8 2.7
2.5 2.5
2.2 2.3 2.3
2.0 2.0 2.0 2.1 2.1 2.1
1.9 1.8
1.4 1.6

Difference of
US$ 1,2 bn

2012 2013 2014 2015 2016 2017


Russia (Current) Russia (With Crimea and Spearatists annexed) Russia (IMF forecast before the War)

80 Source: Research - Deloitte (based on EIU, IMF data). Nominal GDP statistics before the war by the IMF (International Monetary Fund), 2012. Statistics of Russia ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
with Crimean separatists conducted by Research - Deloitte with the Bank of Russia and the Central Bank of Ukraine data.
Southeast Asia

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Southeast Asian country share in the region’s GDP
Southeast Asia % Participation

12%
Southeast Asia, especially Indonesia, Singapore and Malaysia has
risen as one of the major emerging economies in recent years. Indonesia
35%
The high number of foreign investment, the high degree of 14% Philippines
industrialization, and constant growth of their GDP has led Thailand
economists to believe that this region may have an overall Singapore
economic boost of the same proportion of the "Asian Tigers"
(South Korea, Taiwan, Hong Kong and Singapore itself) had in the Malaysia
12% Others
late 90s.

12%
Real GDP 15%
% Variation (end of the year)
Region Nominal GDP
20
US$ Trillions
15
3.3
10 3.1
2.9
2.7
5 2.3 2.4 2.5
2.2
1.9
0 1.5 1.5
1.3
-5 1.1
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Indonesia
Indonésia Laos Malaysia
Malásia
Myanmar (Burma) Philippines
Filipinas Singapura
Singapore
Tailândia
Thailand Brunei Camboja
Cambodia 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
82 Source: Research - Deloitte (based on IMF and EIU data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Global % share of M&A in 2014 by country or
Southeast Asia region

USA
The low cost of labor especially compared to China, where the average UK
salary of a worker rose 14% in the last ten years has been a key point that 31% 28%
France
transformed the countries of Southeast Asia in the newer emerging powers. Russia
Japan
With the prices in China becoming more expensive, global markets are China
pushing Chinese suppliers to build factories in other emerging countries of Canada
Asia. This has increased the confidence of venture capital funds and the Germany 1% 7%
Southeast Asia
growth in Private Equity to invest (either in M&A, financial investment, new 3%
Brazil
business or IPOs) in Southeast Asian countries. Others 4% 7%
4%
5% 5% 5%

Global confidence in investing in Southeast Asia and other Global % share of IPOs in 2014 by country
regions. (Media 1 to 5, with 5 more confident). or region
2%0%4%
7%
Southeast Asia
Southeast Asia - Pacific 30%
2014- 3n65 Europe
2013- 3,55 USA 17%
2012- 3,41 China
Japan
Southeast Asia – 3,65 Rest of America
Europe – 2,95 Brazil
20% 20%
Latin America – 2,86 Others

83 Source: Research - Deloitte (based on Deloitte’s PE and VC study and Thomson). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Japan

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Japan
Nominal GDP
US$ Trillions
The low growth in Japanese GDP is tied directly to the great debt
that the Government has sustained in recent years, just over 2 6.0
5.9
times the country's GDP (alarming 230% at the end of 2014). 5.5
4.8 5.0 4.9
4.4 4.4 4.6 4.4
To control the debt, economists point it that is imperative to take a 4.0 4.0 4.2
considerable increase in government revenue, led mainly by a
significant increase in taxes, which has caused an inflationary
increase and impatience of the population.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Consumer prices Real GDP


% Variation (end of the year) % Variation yoy.

2.6
1.9 2.0 4.7
1.5 1.6 1.7
1.7 2.2 1.7 1.6 2.0 1.4 1.6
0.7 1.1
0.5 -0.4 0.1
-1.1
-0.4 -0.2 -0.1
0.3 -1.7 -5.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

85 Source: Research - Deloitte (based on EIU data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Japan Japanese net debt
% GDP
This increase in government revenues should reach about
60% of GDP, almost double the collected today.
230 233 238 240 241
210 216 224
Which could lead Japan in a situation with no apparent way 189 193
out, with increasingly needs of government spending, 167 162 171
especially with the pension and retirement of the Japanese
100% GDP
population (which is getting older) but at the same time, the
use of policies to control the tax increase has been criticized
by population in the government of former Prime Minister
Yoshihiko Noda.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Elderly population and their dependency on


government pensions Japanese government revenue from fees and
Youth Adults Elders % dependency of elders taxes
(right axis) % GDP
100% 50
60% GDP – necessary to pay the public net debt
80% 45

60% 40 35 35 35
33 34
40% 35 31 31 32 31 32
31
30 30
20% 30

0% 25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

86 Source: Research - Deloitte (based on EIU and IMF). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Other countries

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Other countries
General outlook Crisis and conflicts

Economic drivers

France
Civil war and the rise of
Canada Terrorist attack in Charlie IS has caused major US
Hebdo in Paris increased Syria and global interventional
Depreciation of the hostility against issues.
Canadian Dollar due to immigrants.
Greece North Korea
largely be correlated
In recent negotiation of a
with the fall in oil prices Election of Syriza Recent cyber attacks
Iran nuclear program with the
accentuated the unstable
Possible questions the US, after the political
Cuba troika and political situation with the
economic opening during 2014
participation in Egypt US.
reopening with
Mexico the US Euro.
Economics and politics deteriorating
Penetrating question after the uprising against Hosni
with the murder of Guinea Mubarak and Mursi, now the
students and the recent Ebola focus. Still uprising is against Sissi, considered
fight against the being controlled more authoritative than their
narcotics predecessors.
Nigeria
Bolivia Australia
Attack of the Boko
Venezuela Haram and possible civil
Evo Morales resumed the Expectation of good
presidency. He searches With the oil crisis war between North and economic growth,
access to the sea through a Maduro had to South, initialized by increased domestic
century dispute with Chile reduce the price of South Africa jihadists, has economy, tax cuts and
the transfer of deteriorated the inflation.
gasoline for the Zuma, in his second term, has economy.
first time in 17 focused primarily on investments
years in infrastructure.

88 ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.


Commodities

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89 text) ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Agriculture commodity prices
Commodities Index: Dec 2010=100
Agriculture 120
Sugar Soy Coffee
Café Maize Wheat

115
In early 2015 the main products sold by Brazil in the
international market fell. 110

105
Wheat declined -10.2%, due to increased global supply
caused by reduced consumption. Cocoa rose by 1.3% 100

compared to December 2014 and sugar showed a slight 95


increase of 0.03%. The prices of soybeans and corn 90
declined again, the average price of corn fell 2.18%
compared to December and 8.6% if compared to January 85

2014. 80

Falling soybean prices were 2.9% over December 2014


and over -21% if compared to January 2014. Price of the main agriculture commodities

The coffee fell by 2.4% compared to December 2014 and 2013 2014 2015 2016 2017 2018

had an increase of 43.8% compared to January 2014. On Barley (US$/ton) 246,6 167,8 150,0 175,0 200,0 220,0
the global scenario, soy record production in 2014/15 crop Cocoa (US cents/lb)
Arabic Coffee (US cents/lb)
110,6
139,5
138,9
200,2
128,7
186,3
133,8
202,5
130,0
200,0
125,0
185,0
in the United States must be followed by a significant Robusta Coffee (US cents/lb) 94,2 100,4 98,5 112,5 120,0 130,0
Cotton (US cents/lb) 90,4 83,1 70,8 69,2 70,0 72,5
harvest in Brazil. Maize (US$/ton) 264,4 205,9 182,5 191,3 200,0 215,0
Palm oil (US$/ton) 856,9 821,3 714,1 660,1 680,0 720,0
Rapeseed oil (US$/ton) 1.079,3 907,3 775,7 749,2 775,0 800,0
There are also fears about China's demand that canceled Rice (US$/ton)
Sorghun (US$/ton)
489,5
243,3
423,8
207,2
401,3
185,0
391,3
200,0
400,0
215,0
415,0
220,0
US purchases, in addition to decreasing margins for the Soy (US$/ton) 556,5 501,3 403,8 413,8 430,0 485,0
Sugar (US cents/lb) 17,7 17,0 16,8 18,2 19,8 20,2
production of soybean meal, which should affect the prices Sunflower oil (US$/ton) 1.124,0 901,9 864,9 897,8 950,0 1.000,0
Tea (US$/kg) 2,9 2,7 2,8 2,9 2,9 2,9
of commodities. Wheat (US$/ton) 321,5 302,7 261,3 272,5 310,0 312,0
Wool (AUS cents/Kg) 1.063,0 1.084,3 1.097,3 1.108,2 1.119,3 1.130,5

90 Source: Research - Deloitte based on World Bank, EIU and Index Mundi data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Commodities
Metal commodity prices
Minerals
According to the IMF commodity Monitoring Report (Jan/15), iron ore 15,962
prices are expected to fall 5.3% in 2015 compared to 6.6% decline last 2013 2014 13,925
year.

It is also expected a moderate fall in prices of precious metals, due to


negative perception of institutional investors to make investments.

The reduction in demand for commodities from China and India will also
contribute to this decline. The main risk of metal prices remains through 1,740 1,909 1,967 1,630
1,222 1,201
the occurrence of sharp slowdown in the Chinese economy, since the 136 69
Asian country accounts for almost half of world metal consumption. Aluminum
Aluminio Gold
Ouro Iron de
Minério Nickel
Níquel Prata
Silver
US$/ton US$/troy oz Ferro
ore US$/lb US$/troy oz
US$/dry metric ton

Metal commodity prices prices


Metal commodity
Minério deIron
Minério Aluminum
ore de Ferro
Ferro Copper
Alumínio Alumínio
Cobre Níquel
Cobre
Nickel Gold
Ouro
Níquel Ou
Index (Dec/2010 = 100) = 100)
Index (Dec/2010
130 130
115 115
100 100
85 85
70 70
55 55
40 40
Dez Dez 2011 2011 Dez Dez 2012 2012 Dez Dez 2013 2013 Dez Dez 2014 2014 Dez D
91 Source: Research - Deloitte (based on Index Mundi and IMF). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
Commodities
Oil and gas
In a scenario that assumes no further deterioration in the global macroeconomic environment and OPEC refraining from performing new
management of oil supply, in 2015 the prices should keep an average of US$ 53/barrel - 45% lower than in 2014.
The large current oil production capacity points out to an extension in this very gap in low prices for at least a mid-term period, with prices
recovering modestly in 2016. It is estimated that the weakness in oil prices should be extended to other energy markets, particularly natural gas
in Europe and Asia.
The price of European natural gas and Japanese liquefied natural gas (LNG) are expected to fall 15% and 30% respectively in 2015. A
moderate decline on prices are also expected for natural gas and coal in the United States.

Oil and gas prices Monthly evolution on oil and gas prices
US$ Dollar September/2008 = 100
Gás Natural
Natural gas Oil
Petróleo 140 "Returning Point" Oil
6 120 Arab spring in Egypt Natural gas
120
110 Financial crisis Critical decline
apex on Oil and gas
100 100 prices
5
90
80 European crisis and “War with the
80 High oil prices shale-gas”
4 60
70
Saudi Arabia
lower even more
60 40 the prices
Crimea crisis. Russia blocks searching for
3 50 the supply of gas
20 competitiveness.
Dez 2009 Dez 2010 Dez 2011 Dez 2012 Dez 2013 Dez 2014 Dez

92 Source: Research - Deloitte (based on World Bank and Index Mundi data). ©2015 Deloitte Touche Tohmatsu. Todos os direitos reservados.
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