110401 - BrazilianEconomyOutlook (브라질 정부사이트)

Ministry of
Finance
Brazilian Economy
OUTLOOK
6
th
Edition | April/May | 2010
Ministry
of Finance
Summary
Economic Activity 5
Mass Consumer Market 25
Inflation 33
Interest Rates and Credit 43
International Overview 59
Reduction of External Vulnerability 69

Highlight: Foreign Direct Investment
Fiscal Policy 93
April / May 2010

Highlight: Public Debt
Glossary 121
3
NOTE
Existing data as a proportion of GDP relates to the GDP figures
from the fourth quarter of 2009 released on March 11th, 2010.
Information relative to the economic growth in 2010 on pages 6
to 9 incorporates Brazilian GDP measures from the first quarter of
2010 released on June 8th, 2010.
Brazilian Economy
OUTLOOK
Economic
Activity
Ministry
of Finance
Ministry
of Finance
Economic Activity
A new economic and social policy
The Brazilian economy recorded a contraction of -0.2% of GDP in 2009, but growth resumed strongly in early
2010. In the first quarter of 2010, economic growth accumulated in the last four quarters was equivalent to
2.4% over the same previous period. In the coming years, we expect the Brazilian economy to perform a new
cycle of development under an average annual growth rate estimated at 5.5%, well above previous average
growth rates.
Average GDP Growth (% yoy)
PAC 1 PAC 2
6.5
6.1 Average rate (1998-2002)
5.7
5.1 Average 5.5% Average rate (2003-2008)
Average 4.2% Average rate (2009-2014)
4.3 4.0
Data: % change from
preceding year
2.7 3.2 * Government Forecasts
April / May 2010

1.3 PAC is a strategic investment
1.1 program with management and
Average 1.7% infrastructure actions.
0.0 0.3 -0.2 Source: IBGE

Produced by: Ministry of Finance 6 6
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* 2014*
Ministry
of Finance
Economic Activity
GDP growth in Q1 2010 reinforces vigor and dynamism of Brazilian economy
Compared to the fourth quarter of 2009, the GDP increased 2.7% registered the largest increase under such
comparison since the expansion recorded in the first quarter of 2004 (2.8%). Highlights are Gross Fixed Capital
Formation (a 7.4% growth rate) and the industry (4.2%). In the first quarter of 2010 over the same period of
2009, a 26% GFCF growth was observed, the largest expansion in the historical series initiated in 1995.
Composition of GDP Expansion Q1 2010 / Q4 2009 (% qoq, seasonally adjusted)
11.4*
Data: % change from preceding

quarter, seasonally adjusted
April / May 2010

2.7 7.4 1.5 0.9 1.7 13.1 *Annualized change
from preceding quarter
GDP Gross Fixed Household Government Exports Imports Source: IBGE

Capital Formation Consumption Spending Produced by: Ministry of Finance
7 7
Ministry
of Finance
Economic Activity
Brazil confirms position as one of the first countries out of the crisis
The growth of the economy reached 11.4%, in annualized terms. The 14.6% rise in manufacturing sector in the
first quarter of 2010 compared to the first quarter of 2010 was driven by a high record for the manufacturing
industry, whose increase in the same period was 17.2%, the largest in the IBGE series. The construction industry
also contributed to support the industrial expansion in the quarter, registering a 14.9% growth historical record.
Evolution of GDP (% qoq)
15
11.7 11.4
9.8 9.0
10 8.3 8.4
6.8
6.0
5
-2.0
-5
April / May 2010

Data: % change from
-10 the preceding quarter
in an annualized basis
-12.6
-15
04
04
05
05
06
06
07
07
08
08
09
09
10
Source: IBGE
20
20
20
20
20
20
20
20
20
20
20
20
20
Produced by: Ministry of Finance
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
8 8
Ministry
of Finance
Economic Activity
Investment rate can reach 19% in 2010
Criticisms and comparisons with low-transfers economies notwithstanding, savings rate has increased again
with the raise of investments. The investment rate grew 18% over 2009, of which 1.5 percentage points were
due to the increase in domestic savings. For the next few years, we expect a substantial increase in private and
public savings rate.
Savings and Investment rate (% of GDP)
20
19.0
18.2 18.2 18.1
18.0
18 17.6
16.9
16.7 16.7
17.5
16.2 16.8
15.9
16 16.1 16.3
15.2 16.0
15.8
14.3
14 14.3
14.0
13.8
Investment Rate
April / May 2010

12 Savings Rate
Data: % of GDP
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: IBGE
9 9
Ministry
of Finance
Economic Activity
Brazilian domestic savings is similar to Western economies
The Brazilian domestic savings rate is similar to most of Western’s economies, especially those Government
provides higher income transfers to the low-income classes. Indeed, it has not een a change in the increase of
public and private investment rate in recent years. Instead, the bulk of income transfers has helped domestic
demand generating higher economic growth and public and private investments.
The savings rate will continue its growth in the near future. Brazilian savings rate is not compared adequately
to Asian economies. In China, for example, savings rate reaches 43% of GDP. However, there is a totally diffe-
rent cost-benefit structure far away from Western design. Businesses are subjected to lower labor costs and
competitive exchange rate which revert into higher profitability and hence savings. Chinese families, in turn,
need to save a larger proportion of their income to future consumption with college education, social security
and real estate acquisition.
In Brazil, there are universal health and social security systems, as well as a broad social protection network,
which consume about 14% of GDP in the three levels of Government. In April 2010, Brazilian Federal Gover-
nment, unlike Eastern countries, spent about 9% of GDP in household transfers (Social Security, Bolsa Familia,
LOAS/RMV,...). For the current year, it is expected that public investment (Federal Government and state-
owned enterprises) reaches at least 3.3% of GDP, the same level of public savings.
April / May 2010

10 10
Ministry
of Finance
Economic Activity
Peak of growth resumption under impulses in action
From the second quarter of 2010 on, a slowing down in the economy is expected without the presence of
incentives, such as IPI reduction, decrease in banks’ reserve requirements and interest rates, which was at its
lowest level. The European crisis is still another factor to slow the economy, reducing the availability of credit
from abroad and impacting Brazilian exports and the rolling over of corporate debt.
Composition of GDP Growth (% yoy)
11.9
7.5 7.4
5.0 6.5
5.7 6.1 Domestic Demand
5.3 Net External Demand
5.1
2.7 GDP
0.2 3.2 4.0
2.7 Data: % change from
1.1 preceding year
2.5
* Ministry of Finance forecasts
April / May 2010

0.1
1.7 0.7
0.5 -0.2 Source: Brazilian Central Bank
-0.5 -0.3 Produced by: Ministry of Finance
-1.4 -1.4
-2.2 -2.9
2002 2003 2004 2005 2006 2007 2008 2009 2010*
11 11
Ministry
of Finance
Economic Activity
Industry confidence hits highest third level of time series
The ICI (Industrial Confidence Index) registered an increase in May, reaching 116.1 points, a recovery of
0.8% over the previous month and only 0.4% below March, the best month since November 2007. The
heated domestic demand and the optimistic outlook for GDP growth in 2010 are reflected in companies.
Industry Confidence Index (points, seasonally adjusted)
Optimistic
Pessimistic
April / May 2010

Data: points, seasonally
adjusted
75.7 75.1 76.2 78.0 82.6 87.0 90.6 95.7 100.2 103.6 107.0 109.6 113.4 113.6 115.8 116.5 115.3 116.1
Source: FGV
8
09
09
10
10
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ay
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Ap
Ap
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De
No
Au
Ja
Fe
Ju
Se
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Fe
12 12
M
M
M
M
Ministry
of Finance
Economic Activity
Industrial production grows 22% since the impact of the crisis in December 2008
Industrial production fell -0.7% from March to April this year, after seasonal adjustment, which is an
expected result after the withdrawal of counter-cyclical Government measures. The reduction has stopped
the sequence of a four-month expansion, after accumulating a 6.4% gain. The accumulated rate in the last
12 months increased by 2.3%, while the industrial sector has a 18.0% growth in the first quarter of 2010.
Industrial Output Index (Jan07 = 100)
115 111.8 111.6
110
105
100
95
90
April / May 2010

88.8
85 Data: index-number, seasonally
adjusted (Jan07 = 100)
80
Source: IBGE
7
07
08
08
08
08
08
09
09
09
09
10
0
l0
v0
v0
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r1
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Ju
Ju
Ju
13 13
Ap
No
No
No
Se
Ja
Se
Ja
Se
Ja
M
M
M
M
Ministry
of Finance
Economic Activity
Categories of use indicate continued expansion
The industrial production growth compared to April 2009 was supported by the general expansion of all
categories of use. Capital Goods had the highest increase, well above the General Industry as a whole.
Consumer and Durable Consumer Goods continue to expand, driven by “white” and “brown” line appliances,
cars and cell phones. Intermediate, Semi and Non-Durable Goods keep track of consecutive increases.
Industrial Production by Categories of Use (% yoy)
April / May 2010

7.9 10.9 17.4 17.8 20.9 36.3 Data: % change from
preceding year
Semi and Consumption Industry Intermediate Capital Durable Source: IBGE

Non-durable Overview Goods Goods Produced by: Ministry of Finance 14 14
Ministry
of Finance
Economic Activity
Capital Goods enhance GDP growth
Capital Goods contribute to the acceleration in industrial activity and foster GDP expansion in 2010. Since
December 2009, the growth path has shown a clear recovery in the sector, caused by tax exemptions and
credit increase. Regarding the cumulative change in year over the same period of 2009, before seasonal
adjustments, capital goods showed a rise of 9.4% in April, reinforcing the positive trend of variations since
January 2010.
Capital Goods (% yoy)
28.7
26.3
18.6
14.3
12.6
13.2 29.7 7.1 22.4 23.8 11.0 25.1 16.3 3.7 23.1 12.5 25.2 40.3 36.3 % of preceding month
-14.4 -14.4 -24.4 -21.4 -29.3 -22.6 -24.4 -23.6 -22.0 -20.6 -16.9
-2.5
% accumulated from same period
in the preceding year, seasonally
adjusted
April / May 2010

Data: % change from
-17.4 preceding month and pre-
ceding year, accordingly
Source: IBGE
08
09
0
n0
p0
c0
n0
p0
c0
r1
ar
ar
Ap
De
De
Ju
Se
Ju
Se

M
15 15
Ministry
of Finance
Economic Activity
Consumer confidence keeps increasing trend
Consumer confidence remains high, registering an increase of 0.6% in May compared to April. The ICC (Index
of Consumer Confidence) increased from 115.4 to 116.1 points, regardless seasonal influences.
Consumer Confidence Index (points, seasonally adjusted)
April / May 2010

97.1
97.5
96.8
111.4
113.4
112.3
111.0
115.4
113.0
110.6
108.2
115.1
100.0
111.0
116.1
111.3
102.9
95.5
95.3
Data: points, seasonally adjusted
Source: FGV
8
8
09
09
09
10
10
10
0
10
09
9
09
9
v0
c0
r0
r1
l0
g0
t0
v0
c0

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ar
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Ap
De
De
No
No
Au
Ja
Fe
Ja
Fe
Ju
Se
16 16
M
M
M
M
Ministry
of Finance
Economic Activity
Car sales remain high
The withdrawal of tax incentives should lead to slowdowns in car sales in the coming months. Still,
developments in labor market, individual credit increases and maintainance of consumer confidence at
high levels are factors contributing to the sector expansion. In the first four months of 2010, the licensing
of new vehicles rose by 18.1% over accumulated between January and April 2009.
Licensing of new vehicles (thousand units, daily average)
15 Government
IPI reduction,
with effect extends low IPI
from Jan untill Mar 10
to Mar 09
12
Low IPI Low IPI

extended extended
until Jun 09 until Sept 09
9 End of IPI relief period
April / May 2010

Impact of
crisis on
vehicle sales Data: thousand
units, daily average
6
Source: Anfavea
Fe 9
M 9
Ap 9
M 09
Ju 9
Ju 9
Au 9
Se 9
Oc 9
M 08
Ju 8
Ju 8
Au 8
Se 8
08
No 08
De 8
08
No 09
De 9
Fe 0
Ja 9
Ap 0
10
M 0
0
0
l0
0
0
0
0
0
l0
0
0
1
0
1
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17 17
Ministry
of Finance
Economic Activity
Retail sales still heated
The retail sector recorded increases of 1.6% in sales volume and 0.9% in nominal revenue in March
compared to the previous month, while broad trade recorded raises around 5.0% for sales volume and 3.9%
for nominal revenue, both seasonally adjusted, compared to the previous month.
Sales Volume in Retail Trade (% yoy)

15
9.6
10
PMC (Monthly Survey
of Trade)
8.0 Broad PMC *
Data: % change from each
5
12-month period
April / May 2010

* Including automobiles,
motorcycles, parts and pieces,
and construction materials
0
Source: IBGE
08
Ap 8
M 8
Ju 8
08
Au 8
Se 8
Oc 8
No 8
De 8
Ja 8
Fe 9
09
Ap 9
M 9
Ju 9
09
Au 9
Se 9
Oc 9
No 9
De 9
Ja 9
Fe 0
M 0
10
0
r0
0
r0
0
l0
0
0
t0
v0
c0
l0
0
0
t0
v0
c0
1
1
b
ar
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ar
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n
g
p
n
b
g
p
n
b
ar
Ju
Ju
Fe
M
18 18
Ministry
of Finance
Economic Activity
Retail sales: positive results in economic activities
In March, seven of the 10 sectors surveyed recorded growth in sales volume in seasonally adjusted terms
compared to the previous month. In comparison to March 2009, eight retail activities recorded growth in
sales volume. Vehicles, Motorcycles, Parts and Pieces expanded sales in March compared to February reflect
consumers’ rush before the IPI tax exemption was withdrawn on automotive vehicles.
Real Retail Sales (% mom)
Weight Activity Mar 10 / Feb 10

100 Broad Retail Trade 5.0
57.7 Retail Trade 1.6
37.1 Automobiles, motorcycles, parts and pieces 10.3
1.0 Office, computer and communication supplies 8.6
5.0 Construction material 3.0

5.7 Fuels and lubricants 1.5
4.9 Textile, clothing and footwear 1.5
5.1 Other articles of personal and domestic use 0.6
April / May 2010

3.7 Pharmaceutical, medical, orthopedic and perfumery articles 0.4
Data: % change from
8.5 Furniture and household devices -0.1 preceding month
0.9 Books, newspapers, magazines and stationery articles -0.2
Source: IBGE
28.2 Hyper/Supermarkets, food, beverages and tobacco -0.8
Ministry
of Finance
Economic Activity
Composition of Gross Domestic Product
Monthly Survey of Trade Seasonally adjusted Before seasonal adjustment

(%) same period of the previous year (%)
Basis: Preceding month: Yearly 12-month

March, 2009
March, 2010 February, 2010 accumulated period
Retail Trade 1.6 15.7 12.8 8.0

Fuels and lubricants 1.5 6.4 5.4 1.4
Hipermarkets, supermarkets, food, -0.8 15.3 12.4 10.4
beverages and tobacco
Textiles, clothing and footwear 1.5 15.7 9.5 0.4
Furniture and household devices -0.1 25.7 21.6 6.7
Broad Retail Trade 5.0 22.0 15.5 9.6
Automobiles, motorcycles, parts and pieces 10.3 32.4 20.7 14.6
Construction materials 3.0 19.5 14.7 -1.5
April / May 2010

Data: % change
Source: IBGE
Ministry
of Finance
Economic Activity
Composition of Gross Domestic Product
change in the preceding

quarter
Gross Domestic Product Preceding period of the previous year (%)
Seasonally
adjusted (%)
Basis: 4-Quarter early
4Q 09 1Q 09 2009 / 2008
1Q10 Accumulated Accum.
Farming 2.7 5.1 -3.3 5.1 -5.2
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Industry 4.2 14.6 0.0 14.6 -5.5
Mining - 13.7 3.6 13.7 -0.2
Manufacturing - 17.2 -0.4 17.2 -7.0
Construction - 14.9 -0.8 14.9 -6.3
Services 1.9 5.9 3.6 5.9 2.6
Trade - 15.2 3.7 15.2 -1.2
Transportation, Storage and Mail - 12.4 2.0 12.4 -2.3
Information Services 1.9 2.6 3.9 2.6 4.9
GDP (current prices) 2.7 9.0 2.4 9.0 -0.2
Household Consumption 1.5 9.3 6.0 9.3 4.1
Government Consumption 0.9 2.0 3.1 2.0 3.7
Gross Fixed Capital Formation 7.4 26.0 -1.5 26.0 -9.9
1.7 14.5 -4.2 14.5 -10.3
April / May 2010

Exports of Goods and Services
Imports of Goods and Services (-) 13.1 39.5 -0.4 39.5 -11.4
Data: % change
Source: IBGE
Ministry
of Finance
Economic Activity
Industrial Production - March 2010
Seasonally adjusted Before seasonal adjustment

Industrial Production
(%) Change from same period of the
previous year (%)
Basis: Preceding month: Quarterly Yearly
March 10 Mar 09 Accumulated 12-month
February, 2010 Average
General Industry 2.8 3.0 19.7 18.1 -0.3
Mining industry 0.8 4.3 15.8 19.1 -1.1
Manufacturing industry 2.6 3.8 20.0 18.0 -0.3
Capital goods 3.0 4.0 38.4 25.6 -8.6
Industrial - - 23.1 23.6 -18.3
serials - - 26.7 29.9 -20.4
non-serial - - 7.1 -1.6 -6.8
Agricultural - - 48.7 42.6 -14.7
Agricultural parts - - 4.3 21.3 -31.3
Construction - - 244.5 216.2 -20.7
Electricity sector - - 29.4 -3.3 -28.9
Transportation equipment - - 33.7 19.4 -4.9
Mixed-use - - 37.0 28.8 -3.3
Intermediate goods 1.3 3.6 18.6 19.5 -0.5
April / May 2010

Durable Consumer goods 0.1 3.0 25.8 28.4 4.9
Semi and Non-Durable Consumer goods 1.3 3.7 11.4 9.1 1.1
Data: % change
Source: IBGE
Ministry
of Finance
Economic Activity
Consumer Forecast Survey and
Forward Indicators for Industrial Output
Consumer Survey (FGV) % change compared to the same period last year
Basis: March April May Yearly 12-month

May 2010 2010 2010 2010 Accum. period
Consumer Confidence Index 13.2 15.8 12.9 14.6 10.5
Intention of Durable Goods Purchases 13.2 11.8 7.2 10.7 6.1
Current Situation of the Local Economy 53.9 66.4 48.1 54.5 34.4
Current Family Financial Situation 3.6 8.8 12.5 7.3 2.8
Forward Indicators for Industrial Output

Preceding month (%) Preceding year (%)
Basis: Apr 10 Feb 10 Mar 10 Apr 10 Feb 10 Mar 10 Apr 10
Total Vehicles Production (Anfavea) -0.6 7.4 -7.4 22.2 23.4 14.2
Heavy Vehicles Flow on the Highways (ABCR) 2.4 2.9 -1.9 11.9 13.6 8.6
Shipping Paper (ABPO) 1.8 0.9 -1.7 20.3 20.5 18.3
Imports - intermediate goods (quantum) 12.6 7.6 1.8 53.9 68.7 63.2
April / May 2010

Exports - intermediate goods (quantum) 15.8 4.3 3.3 16.3 15.6 3.9
Consumo de Energia Elétrica (GWh) 0.8 -1.3 -1.7 11.5 8.1 7.9
Data: % change
Source: FGV, Anfavea, ABPO and ABCR

Ministry
of Finance
Economic Activity
Industry Sales - March and April, 2010
Change (%) Change from preceding year (%)

Industrial Sales (CNI) Preceding month Quarterly March Yearly
March, 2010 12-month
February, 2010 Average 2010 Accumulated
Real revenues 4.3 3.7 14.7 12.0 0.0
Hours worked in production 2.7 3.1 10.5 6.5 -4.5
Packages (ABPO) Preceding month Quarterly April Yearly
April, 2010 12-month
March, 2010 Average 2010 Accumulated
Wavy paper dispatch -1.7 0.8 18.3 19.3 8.4
Automobiles (Anfavea) Preceding month Quarterly April Yearly
March, 2010 Average 2010 Accumulated
Automobile production -7.4 -1.8 14.2 22.5 11.5
Automobile license (domestic and imported) -12.3 16.6 18.5 18.1 17.4
Automobile exports -30.2 4.3 34.8 78.3 -6.2
Change from same period of the
Manufacturing Industry Survey previous year (%) Yearly
Data: % change
February March April Accumulated * NUCI was calculated
2010 2010 2010
April / May 2010

using the annual average of
Expected production 39.6 25.4 12.0 28.7 15.1
Level of employment prevision 59.5 47.0 30.2 45.4 9.8
the last 12 months and the
Domestic demand 62.5 59.0 50.6 60.1 11.5 last three monthly values.
External demand 34.4 41.3 36.8 36.0 -2.3
Source: CNI, ABPO, FGV and Anfavea
Inventories 20.2 17.6 14.8 18.6 6.3
Industry Confidence Level* Produced by: Ministry of Finance
83.1 83.5 84.5 83.3 82.3 24 24
Brazilian Economy
OUTLOOK
Mass Consumer
Market
Ministry
of Finance
Ministry
of Finance
Mass Consumer Market

Middle class supports Brazilian economy dynamism
FGV research shows the global financial crisis has not reached the majority of Brazilian people. Poverty
keeps declining and Class C has jumped from 42% to 53% of country’s population (nearly 103 million)
between 2003 and 2009. The social mobility generates significant changes in the Brazilian market. Since
2002, around 25 million people have moved from the bottom to the core of the social pyramid, altered the
consumption profile and have been enjoying typical comforts of the middle class.
A New Class C (% of population)
53.6
46.3 47.5 46.7 52.0 53.8

44.7 50.0
43.2 43.0 40.8 36.0
40.1 33.2
30.9 30.8
Class A/B (from R$ 4,807)

15.6 Class C (from R$ 1,115 to
13.2 14.0 14.7 15.3
12.0 10.6 11.6 R$ 4,807)
Class D/E (until R$ 1,115)
April / May 2010

2002 2003 2004 2005 2006 2007 2008 2009 Data: % share of population
* Prices in December, 2008
Total Class changes (Dec 02 - Dec 09. millions)
7.7 31.2 Source: FGV
-25.5 Produced by: Ministry of Finance
Class A/B Class C Class D/E 26
Ministry
of Finance

Real minimum wage rises to the highest value in the past 20 years
The Brazilian economy goes through a structural transformation. Economic stability, credit expansion and
GDP growth have enabled the increased purchasing power and the recovery of real minimum wage. When
deflated by INPC index, the minimum wage in January 2010 has reached the highest value in 20 years.
Indeed, the process leads to increased consumption, attracting investment and a keen interest in retail and
consumer companies in the Brazilian market.
Real minimum wage (R$)
600
Fernando Collor
Itamar Franco
FHC (1st) FHC (2nd) Lula (1st) Lula (2nd)
510.0
500
400
300
Data: R$, before seasonal
April / May 2010

200 adjustment
* In January, 2010
100
Source: IPEA
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
*
10
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20 Produced by: Ministry of Finance
20
27
Ministry
of Finance

Unemployment rate hits lowest value of the historical series
The unemployment rate in Brazil in April was 7.3% of the economically active population, the lowest number
for the month over the past eight years. Considering seasonal adjustments of labor market, unemployment
rate is even lower: 6.8%, the lowest variation throughout the series. The total of unemployed (1.7 million)
was stable compared to March, but fell 16.4% compared to April 2009. Overall, the economic environment
remains favorable for labor market in 2010.
Unemployment rate (% of the economically active population)
8.6 8.4
8.2 8.3 8.4
8.0 8.0 8.0
7.8 7.9
7.7 7.7
7.5
7.2 Before seasonal adjustment
7.1
Seasonally adjusted figures
April / May 2010

6.8
Data: % of the economically
8.2 8.5 9.0 8.9 8.8 8.1 8.0 8.1 7.7 7.5 7.4 6.8 7.2 7.4 7.6 7.3
active population
Source: IBGE
09
09
09
09
09
09
10
10
10
0
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g0
t0
v0
c0
r1 Produced by: Ministry of Finance

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ar
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Ju
Oc
Ap
Ap
De
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Ja
Fe
Ju
Se
Ja
Fe
28
M
M
M
Ministry
of Finance

Net employment generation: creation of 2 million jobs
Considering the net employment generation, since 2003, 12.4 million new jobs have already been
created. It is estimated that nearly 2 million jobs will be created, resulting in an expansion of 13.8 million
new jobs from 2003 to 2010.
Net Employment Generation (thousands of jobs)
13.8 million formal jobs
2,000
1,038 Accomplished jobs in 2010

Data: thousands of jobs
* The Result of 2009 refers only to
CAGED balance
April / May 2010

962 **Ministry of Finance forecasts
1,235
1,494
1,863
1,831
1,917
2,452
1,834
502
961
861
995
387
274
88
75
Source: Ministry of Labor & Employment

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*2010** Produced by: Ministry of Finance
29
Ministry
of Finance

Employment generation logs record
The generation of formal jobs in Brazil registered a record high in the first quarter of 2010: 962,300 job
surplus in employment generation. In addition to the best April in history, the opening of 305,100 new
places is the second largest CAGED series figure, started in 1992 (the monthly record is 309,400 in June
2008). The sectors that have contributed most were services (96,600) and manufacturing (83,100). In
cumulative terms over the past 12 months, there has been generated 1.9 million new jobs in the country.
Net job generation in the formal market (thousand of jobs, accumulated in 12 months)
Net job generation in the

formal market
April / May 2010

Data: thousand of jobs,
652 580 390 326 329 299 468 756 995 1279 1479 1710 1909
accumulated in 12 months
Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 Source: Ministry of Labor & Employment
Produced by: Ministry of Finance 30
Ministry
of Finance

Formal employment rises to highest level since 2006
The rate of formalization, defined as the proportion of the employed population under a formal contract in
relation to the employed population, had a 0.39% monthly growth, reaching a level of 51.1% in April 2010.
Still, the occupancy level in 12 months (52.4%) is very close to its record high (52.5%) registered in 2008.
Rate of Formalization (% formally employed over the occupied population)
51,5 51.1
50.9
51,0 50.7
50,5 50.3
50,0
49,5
49,0
48,5
48,0 2008
47,5 2009
April / May 2010

47,0 2010
46,5 Data: % formally employed
46,0 over the occupied population
45,5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: IBGE
Brazilian Economy
OUTLOOK
Inflation
Ministry
of Finance
Ministry
of Finance
Inflation
IPCA inflation index within the target
The first months of 2010 were subjected to inflationary pressures arising from food groups, compounded by
an increase in the volume of rainfalls, seasonal adjustments in Education, Public Taxes, Fuel (ethanol) and
price adjustments in Personal Expenses, specifically Registry Offices and Official Agents. Despite market
expectations, we expect annual IPCA close to 5.0% in 2010.
IPCA Inflation Index (% yoy)
Inflation target
Lower and upper bounds
IPCA inflation index
Data: % change from
preceding year
April / May 2010

12.5
* Market Expectations FOCUS

8.9
6.0
7.7
9.3
7.6
5.7
3.1
4.5
5.9
4.3
5.6
4.8
4.5
4.5
4.5
Report from May 10th, 2010
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* 2014* Source: IBGE and Brazilian Central Bank
Ministry
of Finance
Inflation
Dispersing food shock decreases IPCA
The IPCA drop in May 2010 compared to April 2010 resulted from the downturn in prices of four of the nine
groups that consists IPCA index, namely: Food and Beverages (1.45% to 0.28%), Clothing ( 1.28% to 0.91%)
Health & Personal Care (0.84% to 0.74%), and Education (from 011% to 0.04%). Among them, the greatest
impact to the overall index came from Food group, with a contribution of 0.06 percentage points compared to
the contribution of 0.33 percentage points in the previous month, standing below May 2009.
Decomposition of IPCA Inflation (% mom)

0.46
0.30
0.33 0.35
0.49
0.50 0.44
0.19
0.46
0.26 6.85 0.10
0.22
0.25 0.01
0.03 0.29 0.05 Fuels
0.26 0.17
0.22 0.26 0.09 Transportation
0.16 0.18
0.01
0.01 0.29 Food
0.02 0.05 0.30
0.01
0.04 Remaining Itens
April / May 2010

0.08 0.18 0.17
0.08 0.01 0.03 0.01 0.01
0.01 0.00
0.11 0.00 0.02 0.00 0.07 0.12
0.00 0.01 -0.03
0.06 0.13
-0.01 Data: % change from
-0.02 -0.02 -0.03 -0.05 -0.06 -0.06 -0.06 -0.02 -0.06 -0.02 preceding month
-0.02 -0.12
-0.02 -0.01
Source: IBGE
09
09
09
9
09
09
10
10
0
r0
c0
l0
g0
t0
v0
r1
1
n
ar
ay
ar
ay Produced by: Ministry of Finance

Ju
Oc
Ap
Ap
De
No
Au
Ja
Fe
Ju
Se
Ja
Fe
M
M
M
M
35
Ministry
of Finance
Inflation
Food group assumes downward trend
Since January, the responsible for price increases in the Food group have reduced its impact. Abnormal
rainfalls have been affecting the group since the beginning of the year. In terms of cumulative inflation
in the year (January to May), the most representative items are: Legumes, Root and Tuberous Vegetables
(29.8% cumulative change in five months), Cereals, Leguminous and Oleaginous (21.5%); Vegetables and
Greeneries (16.3%), Dairy Products (13.1%) and Sugar products (12.7%).
IPCA Food Inflation (% mom)
Jan 10
Fev 10
Mar 10
Abr 10
Mai 10
Data: % change from
1.4
preceding month
14.8
10.9
11.9
0.8
0.4
4.0
2.4
3.1
1.8
8.4
4.2
8.4
2.9
4.2
4.2
1.9
4.9
7.4
3.4
0.2
April / May 2010

Source: IBGE
-3.5
-2.2
-4.8
-2.4
Legumes, root and Cereals, leguminous Vegetables and Sugar products

Dairy products
tuberous vegetables and oleaginous greeneries
36
Ministry
of Finance
Inflation
IPCA returns to the downward trend from April 2010
IPCA inflation index increased 0.43% in May 2010, decreasing from 0.57% in the previous month. The result
represents the lowest monthly growth of 2010. In 12 months, the deceleration of inflation has been the
first since November 2009. However, the decline in food inflation indicated in recent inflation indexes tends
to determine the reduction in consumer inflation in the coming results of the IPCA, even with the strong
expansion of economic activity.
IPCA Inflation Index and its Expectations (% mom)
0,9
0.78
0,8
0,7 0.75
0.57 0.57
0,6
0.55
0.52
0,5 0.43
0.39
0.43
0.38
0.41 Realized IPCA figures
0,4 0.37
0.35
0.30 Monthly Average IPCA
0,3 0.30 0.30 0.32 0.32
Data: % change from
preceding month
April / May 2010

0,2
* Market Expectations FOCUS
0,1 Report from May 10th, 2010
0,0
Source: IBGE and Brazilian Central Bank
0
11
M 11
Ap 1
11
11
10
10
10
10
10
Ju 0
Au 10
Oc 0
No 10
01
1
01
01
01
20
20
20
20
20
20
20
20
20
20
20
20

r2
l2
g2
t2
v2
c2
37
n
ar
ay
n
n
ar
ay
p
Ap
De
Ja
Fe
Ju
Ja
Fe
Ju
Se
M
M
M
Ministry
of Finance
Inflation
Weekly index shrinks as anticipated
As anticipated in previous editions, the CPI inflation (IPC-S) up to four weeks has shrank. In May 2010 the
index reached 0.21%, down from 0.76% in April 2010, below market perspectives. Regarding the third of
the four weeks, in May 2010, five of the seven groups showed deceleration. The most significant drop came
from the Food group (from 0.52% to -0.34%), especially for Vegetables and Greeneries, Dairy Products, Rice
and Beans, and Beef. The higher pressures came from Clothing and Housing groups.
IPC-S Inflation Index (% mom)
3,5
3,0
2,5
2,0
1,5 Food
1,0
Total Index
Data: % change from
0,5 preceding month
0.21
April / May 2010

0,0
Source: FGV
-0,5 Produced by: Ministry of Finance
-0.46
-1,0
Fe 08
M 08
Ap 08
M 08
Ju 08
Ju 8
Au 08
Se 08
Oc 08
No 08
De 8
Ja 08
Fe 09
M 09
Ap 09
M 09
Ju 09
Ju 9
Au 09
Se 09
Oc 09
No 09
De 9
Ja 09
Fe 10
M 10
Ap 10
M 10
Ju 10
10
0
v0
v0
n
b
ar
r
ay
n
l
g
p
t
c
n
b
ar
r
ay
n
l
g
p
t
c
n
b
ar
r
ay
n
Ja
38
Ministry
of Finance
Inflation
Index of the commodities market - CRB
The spot index CRB (Commodity Research Bureau) is one of the benchmarks for the global commodity market,
constructed from six sub-indices, namely CRB Metals, CRB Textile Raw Materials Industrial CRB, CRB Food Products,
CRB Fats & Oils and CRB Live Animals. The uncertainties created by the worsening of the international financial crisis
led to great volatility in commodity markets, causing reduction of 37% between the highest level of the index in
February 2008 and December 2008. From December 2009 until April 2010, the recovery of 11.5%, due mainly to
soybeans and iron ore. In the first quarter of 2010, the commodity market showed average growth of 4.3%.
Spot Market (US$ e R$) In the first

US$ R$
quarter of 2010,
480 1000 the commodity
950
market showed
average growth
430
424.0
900
of 4.3%.
850
380 800
770.2 750
April / May 2010

330 700
CRB in US$
650 CRB in R$
280 600
Source: Reuters
08
08
08
08
09
09
09
0
c0
c0
1
n
ar
ar
ay

De
De
Ja
Ju
Se
Ju
Se
M
39
M
Ministry
of Finance
Inflation
Food
In the composition of the CRB index, agricultural commodities are estimated at around 34% share in the overall
index. The CRB index refers to the specific behavior of prices in the spot market and it is limited to selected food
products (butter, coconut, corn, swine and cattle live, lard, soybean oil, sugar and wheat grain). Therefore, the
following products are not included: coffee, soybeans, powdered milk, cotton, leather (skins) and tallow, all
agricultural products or their derivatives.
Food Spot Market (US$ e R$)

US$ R$
490 800
643.1 700
440
600
390
500
400
340 354.0
300
April / May 2010

290 CRB Foods in US$
200 CRB Foods in R$
240 100
Source: Reuters
07
07
08
08
09
09
10
0
0
1
n
ay
ay
ay
ay
Ja
Se
Ja
Se
Ja
Se
Ja
40
M
M
Ministry
of Finance
Inflation
Inflation Index Table
xxxxxxxxxxxxxxxx Forecast
Inflation Index May 10 Apr 10 Apr 09 Accum. 2008 Accum. 2009 12-Month 2010*
IPCA 0.43 0.57 0.48 5.90 4.31 5.22 5.67
Food and Beverages 0.28 1.45 0.15 11.12 3.17 6.77 na
Housing 0.78 0.08 0.75 5.09 5.68 4.98 na
Home Supplies 0.59 -0.04 -0.50 1.99 3.05 4.67 na
Clothing 0.91 1.28 1.08 7.30 6.11 6.00 na
Transportation 0.09 -0.08 -0.21 2.32 2.37 3.99 na
Health 0.74 0.84 1.10 5.72 5.37 4.62 na
Personal Expenses 0.75 0.66 2.14 7.35 8.03 6.28 na
Education 0.04 0.11 0.09 4.58 6.11 6.79 na
Communication -0.01 -0.03 0.08 1.79 1.07 0.82 na
INPC 0.73 0.71 0.55 6.48 4.11 5.49 5.72
IPC - FIPE May 10 Apr 10 Apr 09 Acc. 2008 Acc. 2009 12-Month Forecast 2010*
General Index 0.22 0.39 0.31 6.17 3.65 4.38 5.45
IGP - M May 10 Apr 10 May 09 Acc. 2008 Acc. 2009 12-Month Forecast 2010*
General Index 1.19 0.77 -0.07 9.81 -1.71 4.19 8.75
IGP-DI May 10 Apr 10 Apr 09 Acc. 2008 Acc. 2009 12-Month Forecast 2010*
General Index 1.57 0.72 0.04 9.11 -1.44 4.38 8.73 Data: % change
IPA 2.06 0.68 -0.10 9.80 -4.09 3.78 9.43 na = not available
April / May 2010

IPA Agriculture 0.19 1.51 1.36 1.67 -3.16 na na
IPA Industry 2.66 0.42 -0.58 12.98 -4.43 na na * Market Expectations FOCUS
IPC 0.21 0.76 0.47 6.07 3.93 5.26 na Report from June 4th, 2010
INCC 1.81 0.84 -0.04 11.86 3.25 6.06 na
ICV - DIEESE Apr 10 Mar 10 Apr 09 Acc. 2008 Acc. 2009 12-Month Forecast 2010*
Source: DIEESE, IBGE, FGV
and Brazilian Central Bank
General Index 0.22 0.47 0.31 6.10 4.04 5.68 na Produced by: Ministry of Finance 41
Brazilian Economy
OUTLOOK
Interest Rates
and Credit
Ministry
of Finance
Ministry
of Finance
Interest Rates and Credit

Interest rates
In 2009, interest rates - both nominal and in real terms - reached their lowest historical level in a decade,
signaling it is possible to have lower interest rates and inflation control in the Brazilian economy.
SELIC rate and real ex-ante interest rate (% yoy)
30 Reduction in
interest rates
25
and inflation
20
control
15
10.25
10 Selic interest target rate
Real ex-ante interest rate
April / May 2010

5 Data: % change from each
6.4 12-month period
0
Sources: BM&F and Brazilian
7
08
8
09
Ju 10
10
02
2
03
3
04
4
05
5
06
6
07
l0
l0
l0
l0
l0
l0
l0
l0
Central Bank
n
n
ne
n
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja

Ministry
of Finance

Future expectations of interest rates
January 2011 and 2012 DI curves serve as a benchmark for pricing National Treasury Bonds while rolling
over the domestic fixed rate bond. From September 2009 on, future expectations have increased the cost of
rolling over public debt as they are embedded in the financial market curve.
Future DI* Contracts (% yoy)

12.22
11.99
January 2013
January 2012
10.97 January 2011
12-month period
April / May 2010

* DI: One-day interbank
deposit (future)
Source: BMF&Bovespa
09
2/ 009
09
4/ 09
2/ 09
2/ 09
3/ 09
2/ 09
2/ 009
3/ 009
2/ 009
4/ 09
2/ 10
2/ 010
1/ 10
3/ 10
31 010
0
01
20
20
20
20
20
20
20
20
20
20
2
/2
/2
/2
2
/2
1/
2/
3/
4/
5/
6/
7/
8/
9/
1/
2/
3/
4/
5/
10
11
12
/5 45
2/
2/
2/
Ministry
of Finance

Credit concessions may reach 49% of GDP
The economic stability has induced a strong credit offering expansion. A 20% forecast for average credit
growth in 2010 may increase available credit volume to a record of 49% of GDP and provide funding to
productive sectors as well as consumption. The increased credit level and employment generation place the
Brazilian domestic market as a driving force for the economic growth in the upcoming years.
Loans in the Financial System (% of GDP)
Current
Forecast
April / May 2010

Data: % of GDP, as of December
22.0
24.0
24.5
28.1
30.7
34.2
41.3
45.0
49.0
* Ministry of Finance forecast (Jan 10)
2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: Brazilian Central Bank
Ministry
of Finance

Credit: non-earmarked resources expected to increase in 2010
The rise in credit to GDP ratio in 2009, as compared to 2008, reflected the Brazilian economy ability
to overcome the economic crisis. In the first four months of 2010, increases of 18% and 26% in non-
earmarked and earmarked resources, respectively, have been registered. For 2010, there is still a
trend of increasing credit offering, especially within the non-earmarked resources category.
Credit operations with earmarked and non-earmarked resources (R$ billion and % of GDP)
45%
41%
487
36% 370
32% 293
29%
25% 240
23% 207 Earmarked (R$ billion)
25% 22% 184 Non-Earmarked (R$ billion)
166
April / May 2010

118 143 Data: R$ billion, current prices
Totals (% of GDP)
226 240 270 346 431 538 725 879 981
Apr 02 Apr 03 Apr 04 Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Apr 10 Source: Brazilian Central Bank
47
Ministry
of Finance

Credit for individuals leads expansion in 2010
A more stable economy, the lengthening of credit terms and the lowering of credit interest rates have
stimulated loan demand, both for individuals and corporations. Credit for individuals grew 28% in April,
2010 compared to the amount disbursed in September, 2008, when the economic crisis effectively began.
With an emphasis in transactions that offer more tangible collaterals, i.e., Leasing & Acquisition of Goods
and Personal Credit, a 19.1% increase has been observed in the last 12 months.
Credit transactions targeted to individuals*
Sep 08 - R$ 384.3 billions Apr 10 - R$ 492.6 billions
Credit Card Credit Card

6% Mortgages 5.6% Mortgages
1% 1.0%
Leasing and Overdraft Leasing and Overdraft
Acquisition 4% Acquisition 3.6%
of Goods of Goods
39% Others 33.3% Others
14% 15.6%
Credit Unions Credit Unions
4% 4.6%
Data: % share
April / May 2010

Personal Credit Personal Credit
32% 36.3%
* Non-earmarked balance
Source: Brazilian Central Bank
48
Ministry
of Finance

Credit to corporations reacts
Regarding the pre-crisis period, loans to corporations have raised to nearly 10%, led mainly by state-owned
banks credit. There was a 7.4% increase in April, as opposed to April 2009, signaling a recovery in corporate
investments.
Credit transactions for corporations*
Sep 08 - R$ 444.4 billions Apr 10 - R$ 488.6 billions
Import Financing Import Financing

Rural Rural 3.2%
4% Financing
Financing
1% 0.8% Advances on Exchange
Advances on Exchange Others Contract and Export Funding
Others Contract and Export Funding
13.98% 14% 7.8%
15%
Hot Money Hot Money Vendor

0.02% Vendor 0.1% 1.8%
Rolling Capital 2% Rolling Capital Leasing and
34% 46.3% Aquisition of Goods
12.6%
Leasing and
Data: % share
April / May 2010

Aquisition of Goods Promissory
16% Note Discount
3.3%
Check Credit
for Companies * Non-earmarked balance
Promissory 10.0%
Note Discount
3%
Check Credit
for Companies
11%
49
Ministry
of Finance

State-owned banks lead credit increase after crisis
State-owned banks have played a pivotal role to unlock bank lending during the critical period of the crisis. From
September 2008 to April 2010, their total disbursements grew 53%, well above a 16.2% rise by domestic private
banks and the 6.8% by foreign private banks operating in Brazil. State-owned banking market share reached
41.5% in April, as opposed to 40.5% share of the domestic private banking, and 17.9% of the foreign financial
institutions.
Financial system credit transactions development, according to capital control - index-number (Sep 08 = 100)
160 54.7%
145
130
Public Financial Institution
Foreign Financial Insitution
16.2%
Domestic Private Financial
115 Institution
April / May 2010

6.8% Data: index-number
(Sep 08 = 100)
100
10
0
09
M 9
09
09
9
09
9
10
10
08
8
09
09
r1
r0
l0
g0
t0
v0
c0
t0
v0
c0

n
ar
ay
p
p
ar
Ju
Oc
Oc
Ap
Ap
De
De
No
No
Au
Ja
Fe
Ju
Se
Se
Ja
Fe
50
M
M
Ministry
of Finance

Corporations benefit from the decrease in banking spreads
Along with the drop in default rates and a more positive scenario related to employment and wage
improvements, bank interest rates for corporations reached 26.3% yoy in April. A 3% decrease in banking
spread occurred, despite the raise in the cost of funding. For 2010, it’s estimated that the rates will reduce
its lowering pace.
Banking spread for corporations (% yoy)
35
28.8
28 26.3
SPREAD
Apr 09 Apr 10
21
18.3 16.8
14 10.5
9.5 Funding Rate
April / May 2010

Lending Rate
7
12-month period
0
5
08
09
0
r0
g0
c0
r0
g0
c0
r0
g0
c0
r0
g0
r0
g0
r1
c

Ap
Ap
Ap
Ap
Ap
Ap
De
De
De
De
De
Au
Au
Au
Au
Au
51
Ministry
of Finance

Interest rate for individuals
Banking average loan rate for individuals increased from 41.0% yoy in March—the lowest level since the
beginning of the historical time series—to 41.1% yoy in April. However the spread fell 2%, reaching 29.5%,
the lowest level in a time series initiated in July, 1994.
Banking spread for individuals (%)
70
56 48.8
41.1
42
Apr 09
SPREAD 38.5 Apr 10
28 29.5
Funding Rate
April / May 2010

10.3 11.6 Lending Rate
14
12-month period
0
4
Ap 9
0
c0
r0
g0
c0
r0
g0
c0
r0
g0
c0
r0
g0
c0
r0
g0
c0
r1
Ap
Ap
Ap
Ap
Ap
De
De
De
De
De
De
Au
Au
Au
Au
Au
Ministry
of Finance

A fall in individual default rates
Credit default rates for individuals have shown a downward trend since July, 2009. In April, the rate
decreased from 7% to 6.8%, the lowest level since December, 2005. The maintenance of economic growth
pace, along with the expansion in job market, has made the decrease in default rates possible.
Default Rates for Individuals (% of total)
Default Rates (15 to 90 days)

Default Rates (more than
April / May 2010

90 days)
Data: % of total
7.3 8.4 6.7 8.5 6.6 8.4 6.4 8.4 6.3 8.3 6.2 8.1 6.2 8.1 5.9 8.0 5.5 7.7 5.6 7.5 5.7 7.2 5.9 7.0 5.7 6.8
Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 Source: Brazilian Central Bank
53
Ministry
of Finance

Corporate default rates remain in low levels
Corporate credit default rates have been decreasing from October 2009 and March 2010. Since then, and
also for the rest of the current year, rates are expected to remain in historical low levels.
Default Rates for Individuals (% of total)
Default Rates (15 to 90 days)

Default Rates (more than
April / May 2010

90 days)
Data: % of total
2.8 2.9 2.7 3.2 2.3 3.4 2.4 3.8 2.2 3.9 2.1 4.0 2.3 4.0 2.1 3.9 1.7 3.8 1.9 3.8 2.1 3.7 1.9 3.6 1.9 3.6
Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 Source: Brazilian Central Bank
54
Ministry
of Finance

Bank loans shall be driven by earmarked resources
Along with the expectations of continued economic recovery, it’s estimated that bank credit shall be driven
by earmarked resources, which include loans from BNDES, for the rural sector and for housing programs. Such
credit lines respond for one-third of total credit disbursement and are expected to increase 26% in 2010.
BNDES Credit Operations (R$ billion)
Disbursements
Approvals
Data: R$ billions, amount from
April / May 2010

each 12-month period
* Jan - March 2010
121
137
169
114
176
13
18
19
19
23
18
20
23
28
25
27
37
41
34
40
40
38
47
54
51
74
65
99
91
10
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: BNDES
Ministry
of Finance

Banking interest rates drop to historical levels
With the decrease in default rates since November 2009, and the positive outlook for credit recovery, average
banking interest rates decreased to historical levels: 41.1% for individuals and 26.3% to corporations.
Consumer credit cost
Lending Costs
Interest Rate Evolution
Category Feb Mar Apr Monthly Change
General credit 34.4 34.2 34.3 0.1 p.p.

Credit for individuals 42.0 41.0 41.1 0.1 p.p.
Credit for corporations 25.9 26.3 26.3 0.0 p.p.
Individuals Feb Mar Apr Monthly Change
April / May 2010

Loans for durable goods 50.9 50.2 49.7 -0.5 p.p.
Loans for automobiles 24.1 23.5 23.5 0.0 p.p. Data: % change from
preceding year
Overdraft check 159.5 160.3 161.3 0.2 p.p.
Private loans 43.8 42.7 42.9 1.0 p.p. Source: Brazilian Central Bank
Ministry
of Finance

Credit Market - GDP
Credit Market (% GDP) April Share (%) Change (p.p) Change (p.p)
2010 compared to compared to
Dec 09 Apr 09
Total Credit Volume 45.2 100.0 0.2 4.0
Earmarked Resources 15.0 33.2 0.4 2.8
Non-earmarked Resources 30.2 66.8 -0.2 1.2
Credit Market (US$ billion) April Share (%) Change (p.p) Change (%)
2010 compared to compared to
Dec 09 Apr 09
Financial System Credit

Total Credit Volume (balance at end of period) 1468.2 100.0 3.80 17.56
Public Sector 59.6 4.1 1.08 110.51
Private Sector 1.408.5 95.9 3.92 15.41
Industry 307.5 20.9 0.90 3.42
Housing 104.1 7.1 13.29 49.72
Rural 115.9 7.9 3.21 7.89
April / May 2010

Trade 140.9 9.6 3.36 17.59
Individuals 484.2 33.0 4.69 17.69
Other Services 256.1 17.4 3.38 19.07 Data: % change
Ministry
of Finance

Credit Transactions - Earmarked Resources
Loan Operations
Apr 10 Change (%) Change (%)
Credit Market (US$ billion) (%)
(R$ billion) Dec 09 Apr 09
BNDES 295.6 20.1 4.46 36.59
Rural (excluding leasing and financing, and direct transfers from BNDES) 80.9 5.5 2.75 3.05
Housing (for individuals and housing cooperatives) 99.0 6.7 13.27 50.52
Other (development banks and fomenting agencies) 11.5 0.8 7.64 22.27
Loan Operations - Free Segment
Directed to Individuals 492.6 33.6 4.83 18.18
Directed to the Corporations 488.6 33.3 0.81 5.77
Domestic Resource 437.5 29.8 1.81 15.16
External Resources 51.1 3.5 -6.97 -37.72
Free Segment - New Credit Offers
Total Concession Volume 164.1 100.0 8.51 6.64
Directed to Individuals 64.59 39.3 13.15 13.76
Personal Loan (including safekeeping/consigned transactions) 12.3 7.4 -1.10 23.15
Acquisition of Goods 12.1 7.4 -3.59 0.60
Credit Cards 9.0 5.5 8.93 61.49
Directed to Corporations 18.0 10.9 36.37 31.75
April / May 2010

Working capital 99.6 60.7 5.71 2.48
Guaranteed Account 25.1 15.3 21.52 28.19
Acquisition of Goods 30.8 18.8 8.38 0.53 Data: %, R$ billions
Advances on Exchange Contracts 2.8 1.7 0.59 -9.25
ACC 4.0 2.5 -18.12 -19.45
Foreign Onlendings (relending in connection to new money loans) 0.2 0.1 -73.96 -48.54
Brazilian Economy
OUTLOOK
International
Overview
Ministry
of Finance
Ministry
of Finance
International Overview
Global economic growth – 2009 and 2010
In general, due to effective government interventions, emerging markets have had a positive performance in
2009. Regardless the small decrease in GDP, the Brazilian economic performance has been well above other
emerging economies like Russia, South Africa and Mexico. In 2010, on account of cyclical and corrective
measures, emerging economies are expected to be at the forefront of the world economic development. Within
this perspective, the Brazilian economy is expected to grow at a 6.0% to 6.5% range.
GDP growth (% yoy) *
4Q 2009
1Q 2010
Data: % change from
the preceding quarter in
an annualized basis
* Data from 1Q 2010 refers to
0.8
1Q 2009
10.8
11.7
11.4
0.7
0.6
8.4
6.9
9.1
4.2
4.9
5.6
3.0
2.7
2.2
0.5
7.9
April / May 2010

Source: JP Morgan
-1.4
United
China* Brazil India Japao States Russia Euro Area Germany Mexico
60
Ministry
of Finance
The second best fiscal balance among G-20 countries in 2010
In 2009, Brazil presented one of the least nominal deficits of the G-20 countries. For 2010, as a result of a
continued process of fiscal improvements, a deficit around 1.5% of GDP is expected, well below the average
achieved by G-20 economies.
Fiscal Result (% of GDP) – G-20 economies – 2009
1.3
-1.0 -1.5 -2.0 -2.3 -3.0 -3.1 -4.0 -4.1 -4.3 -4.7 -5.3 -5.6 -6.0 -6.8 -7.1 -7.9 -8.4 -11.0
-11.0 -12.8
-12.8
1.3
Average-5%
April / May 2010

Data: % of GDP
y
na
Ge ey
ly
So a
Un e
in
M il
In ico
Au sia
lia
Ca a
da
S ia
at d
re h
ric h
Ar ro
Ar bia i
an
a d
az
di
in
c
pa
Source: The Economist

Ita
ss
St te
Ko out
Af t
ita
a
ea
es
rk
an
ra
Ar Sau
nti
na
Eu
ne
ex
In
Ch
Br
rm
Ru
Ja
i
Tu
st
Br
Fr
ge
do

Ministry
of Finance
Bank lending in Brazil still low when compared to other economies
In recent years, bank credit in Brazil has grown at rates exceeding 15% yoy, a rate compatible to its economic
growth. It’s expected that in 2010 it will continue to grow at a sustainable pace, reaching an estimated
49% per GDP ratio, which is similar to the financing levels of benchmarks in a large number of economies
worldwide.
Credit (% of GDP) - Selected Countries - 2008 and 2010
Data: % of GDP
187
170
155
153
103
* Government Forecasts
98
97
88
81
78
74
58
57
49
33
12
April / May 2010

Source: Ecowin and Moodys
08 s
08 e
08 n
08 d
08 a
08 n
So 08 y
0 a
08 y
08 ia
0 le
08 .
10 zil
08 d
0 o
08 a
ec ep
ar ate
ar Ital
ec ar
ec ric
ar ad
ep tin
ar nc
ec xic
ar pai
ar lan
ar pa
ec an
ec d
ec hi
ar Bra
)
E )
ut )
H 8)
Cz 8)
)*
Ar 8)
)
(D In
(D h R
(D ung
(M ra
(D Af
(D C
(M an
(M Ja
(D Pol
(S n
(D e
(M d St
(M S
(M ng
ge
M
F
C
ec
h
ite
(M
(M
Un
62
Ministry
of Finance
Expansion in mortgages expected for 2010
Credit disbursements related to mortgage have had a record expansion rate, rising 50% yoy in April.
Nevertheless, the 3.2% mortgage-GDP ratio is among the lowest in the world. The country housing
deficit—around 8 million units—widens market scope under larger availability of credit lines and access
to all society segments.
Mortgage credit (% of GDP)
Brazil 3.2%
India 5%
China 12%
South Africa 34%
Japan 40%
Spain 59%
United States 78%
April / May 2010

United Kingdom 83%
Australia 84% Data: % of GDP

Denmark 100% Source: ABECIP, Brazilian Central Bank
and World Bank
63
Ministry
of Finance
Household’s debt in mortgage credit and consumption
Brazil presents one of the lowest percentage shares of household income committed to mortgage and. As
opposed to the industrialized economies, private debt in the country is more related to consumption.
Household’s Debt - Mortgage Credit and Consumption - Selected Countries (% of household income)
April / May 2010

181.4 141.6 131.6 127.7 100.2 98.3 72.1 29.3 Data: % of household income
Source: OCDE, IBGE and Brazilian

Central Bank
United United Produced by: Ministry of Finance
Canada Japan France Germany Italy Brazil
Kingdom States 64
Ministry
of Finance
The Brazilian financial system and the credit portfolio
The Brazilian domestic financial system portfolio by capital origin has a more well-balanced distribution,
if compared to the ones of the main emerging economies. Such structure is the basis for a more consistent
credit leverage, as it is better distributed within state-owned banks, domestic private banks and foreign
private ones.
Credit portfolio per origin of capital (% of total assets)
China
India
Russia
Brazil
State
Poland
Private
Foreign
April / May 2010

Mexico Data: % of total assets
0 20 40 60 80 100 Source: Central banks, Survaillance

agencies, Raiffesen, Andrei Vernikov
65
Ministry
of Finance
Three Brazilian banks within the 25 world’s top banks
Three Brazilian banks are ranked among the world largest banks by market value. The continued credit
expansion strategies, along with effective risk management practices, have rendered better quality results,
fall in default rates as well as capital maximization.
World’s Largest Banks Ranking (US$ billion)
Industrial and Commercial Bank of China 226 China

China Construction Bank 187 China
HSBC 176 United Kingdom
Bank of China 145 China
Citigroup 126 United States
Santander 98 Spain
Itaú-Unibanco 84 Brazil
Sberbank 58 Russia
Bradesco 54 Brazil
Standard Chartered 54 United Kingdom
Bank of Communications 53 China
UniCredit 50 Italy
BBVA 47 Spain
China Merchants Bank 45 China
Banco do Brasil 42 Brazil
Al Rajhi Bank 33 Saudi Arabia
State Bank of India 32 India
China CITIC Bank 32 China
VTB Bank 27 Russia
Brazilian banks
April / May 2010

Shanghai Pudong Development Bank 26 China
DBS Group 25 Singapore
Standard Bank 23 South Africa Foreign banks
ICICI Bank 23 India
China Minsheng Banking 22 China Data: US$ billion
United Overseas Bank 22 Singapore
Source: Bloomberg
Ministry
of Finance
Higher governance levels of fiscal information
Brazil is positioned among the 10 most-opened markets in terms of budget and fiscal debt information
transparency. Institutional advancements, regulation on publicity structure and practices as well as the Provides Extensive
Information (81-100)
continued commitment to the disclosure of information are the basis upon which this performance has Provides Significant
been made. Information (61-80)
Provides Some
Open Budget Index – Selected countries (points) – 2008 Information (41-60)
Provides Minimal
Information (21-40)
(1) United Kingdom 88 Provides Scant or No
(2) South Africa 87 Information (0-20)
(3) France 87
(5) United States 82
Data: The countries that scored
between 81-100 percent were
(8) Brazil 74 placed in the performance
(12) South Korea 66 category Provides Extensive
(15) Germany 64 Information, those with scores
61-80 percent in Provides
(20) India 60
(22) Russia 58
Significant Information, those
(25) Argentina 56 with scores 41-60 percent in
(28) Mexico 54 Provides Some Information,
(29) Indonesia 54 those with scores 21-40
(42) Turkey 43 percent in Provides Minimal
Information, and those with
April / May 2010

(56) Venezuela 35
scores 0-10 percent in Provides
(63) China 14
Scant or No Information.
(80) Saudi Arabia 1
Source: International Budget
Partnership
Ministry
of Finance
G20 Economy 1
(%month of the Inflation Unemployment

GDP (% a.a.) 2 Industrial Production
preceding yearr) (annualized) Rate ³, %
2010 2011 Position Position Position
United States 3.1 2.8 5.2 Apr 2.2 Apr 9.9 Apr
Japan 2.1 1.7 31.8 Mar -1.1 Mar 5 Mar
China 9.9 8.1 17.8 Apr 2.8 Apr 9.6 2009
United Kingdom 1.3 2.1 2 Mar 3.7 Apr 8 Feb 4
Canada 3.1 3.0 -0.7 Feb 1.4 Mar 8.1 Apr
Euro Zone 1.1 1.5 6.9 Mar 1.5 Apr 10 Mar
France 1.5 1.7 6.2 Mar 1.7 Apr 10.1 Mar
Germany 1.6 1.7 8.6 Mar 1 Apr 7.8 Apr 1 The Economist edition as of
Italy 0.7 1.2 6.4 Mar 1.5 Apr 8.3 4Q 09 April 29th, 2010
Russia 4.5 4.2 10.4 Apr 6.1 Apr 8.6 Mar 2 The Economist/EIU Forecasts
Turkey 14.8 14 21.1 Mar 10.2 Apr 14.4 Feb 4 3 National definition
Australia 3.1 3.4 0.9 4Q 09 2.9 1Q 10 5.4 Apr
4 Latest 3 months
India 7.7 8 13.5 Mar 14.5 Mar 10.7 2009
Indonesia 5.6 5.9 2.7 Feb 3.9 Apr 7.9 Aug 5 None seasonal adjustment
South Korea 5 4 22.1 Mar 2.6 Apr 3.7 Apr na = not available
April / May 2010

Argentina 4.2 2.9 7.6 Mar 10.2 Apr 8.4 4Q 09 Data: % month of the preceding
Brazil 6.3 4.5 19.7 Mar 5.3 Apr 7.6 Mar year
Mexico 4.2 2.6 7.6 Mar 4.3 Apr 4.8 Mar
Saudi Arabia 3.3 3.5 na na 4.7 Mar na na Source: The Economist
South Africa 2.8 3.7 6.3 Mar 5.1 Mar 25.2 Mar Produced by: Ministry of Finance 68
Brazilian Economy
OUTLOOK
Reduction of
External Vulnerability
Ministry
of Finance
Ministry
of Finance
Reduction of External Vulnerability

International liquidity in the Central Bank reserves
A positive performance of the Brazilian Central bank in the FX markets has resulted in significant increase
in foreign exchange reserves since 2006. The increase has played a pivotal role to properly face the crisis.
Brazilian International Reserves and IMF Loans (US$ billion – Gross)
0.0 0.0
0.0
0.0
0.0 Net Reserves (IMF loans off)

0.1 IMF loans
28.3 24.9
April / May 2010

0.1 0.0
0.2 4.8 1.8 20.8 0.0
8.8 8.3 Data: R$ billion
* Forecast as of April 30th, 2010
38.6 51.7 60.0 52.1 39.8 27.5 31.2 27.5 17.0 21.0 28.0 53.8 85.8 180.3 193.8 238.5 249,8
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: Brazilian Central Bank
Ministry
of Finance

Lower external vulnerability
Brazil has consistently reduced its external debt and enlarged its volume of international reserves in the
latest years. The increase in reserves and the reduction of debt has also enabled the country to overcome the
worst financial crisis in years. Nowadays, Brazil is a creditor with cash disbursements to the IMF.
International Reserves and Foreign Debt (% of GDP and index)
50 7
6
40
5
30
4
20 3
Reserves /GDP
2 Foreign Debt / GDP
April / May 2010

10 Foreign Debt / Reserves (index)
1
3.1
Data: % of GDP
13.7
11.9
15.2
38.5
33.6
37.4
41.8
38.8
30.4
19.2
15.9
14.1
12.1
12.9
2.0
6.2
6.2
5.1
6.6
6.5
5.8
7.5
5.6
8.9
4.4
8.0
3.8
6.1
8.0
0.8
1.0
1.0
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Brazilian Central Bank
71
Ministry
of Finance

Brazil is more resilient to crisis than in the past
The flexible exchange rate regime, the reserve accumulation and lower external indebtedness have
provided a better situation to the Brazilian current account figures. Events like the FIFA World Cup, the
Olympic Games, as well as government initiatives like PAC and Pré-Sal, point to a very favorable outlook
to the adequate financing of current account deficits and surplus in Balance of Payments in the next years.
International Reserves and Foreign Debt (% of GDP)
40
30
20
10
5.3
4.8
26.5
42.9
31.5
18.1
14.3
12.0
2.6
Foreign Debt
1.5
0
International Reserves
April / May 2010

-6.8
Current Account
-0.5
-2.7
-4.0
-6.0
-10
1974 1982 1987 1998 2010 Data: % of GDP
First Oil External Debt External Debt Before Currency Forecast Source: Brazilian Central Bank
Shock Impact Crisis Default Devaluation (Abr 10)
Ministry
of Finance

Current account deficit does not impact growth forecasts
Current account deficit will not jeopardize growth trend in the coming years. With the world economic
recovery, the increase in iron ore price and the improvement in the competitiveness of our products, we
expect the 2010 deficit a little higher than US$ 42 billion.
Current account (US$ billion and % of GDP)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011*
2 1.8 1.6
4 1.2 2
1
0.8 12 14 14 0.1
0
-24 -30 -33 -25 -24 -23 -8 -28 -24 -42 -50
-1
-1.5 -1.5
-1.8 -2.2
-2 -2.5
-2.8
Current Account (US$ billions)
April / May 2010

-3
-3.5
-4.0 -3.8 Current Account (% of GDP)
-4 -4.2 -4.2
Data: US$ billions and % of GDP
-5
Ministry
--PT--28-05-10_RV of Finance

de Câmbio
Nominal FX rates increase in value
Comparing BRIC’s currency trends to the US dollar, Brazilian currency was the one with the highest
apreciation. Among the reasons: (i) the rising in foreign investment flows as a result of a more intense
al Bank economic growth, higher than that of the US, Europe and Japan; (ii) stock markets’ greater liquidity; (iii)
increasing levels of consumption; (iv) infrastructure prospects, as well as higher interest rates.
Nominal Exchange Rate by US$ (Jan 2006=100)
125
112
104.2
100 100.8
Australian Dollar
Russian Ruble
86 84.6 Indian Rupee
77.9 Chinese Yuan
76.6
April / May 2010

73 Real
Data: nominal exchange rate
by US$ (Jan 2006=100)
60
06
07
08
09
10
20
20
20
20
20
74
Ministry
of Finance

Effective real exchange rate apreciation pace shrinks after IOF
From the end of 2009, the dollar-real exchange rate had its apreciation trend interrupted after Ministry of
Finance issued a new tax related to financial transactions—credit, exchange rates and insurance (IOF) –
and the Central Bank widened its performance within the spot market from the first quarter of 2010 on.
April and May were particularly stressed by the high FX volatility due to the European crisis. The rise in risk
aversion in international markets is expected to foster some valuation on US dollar when compared to the
Brazilian currency.
Real effective exchange rate – R$ x US$ (Jun 94=100)
200
150
Real effective exchange rate

Index bases (Jun 94 = 100)
Data: deflated by IPCA
100
76.5
*Deflated by IPCA untill
March 2010
April / May 2010

** Index below 100 means a real
appreciation of exchange rate.
50
90
91
92
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
Ap 10
0
99
r1
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
'1
75
Ministry
of Finance

Trade balance surplus increase is expected
The trade flow share of GDP grew from 11% to 18% in 2009. Expectations regarding a raise in trade
balance within March and November of the current year have been confirmed. In May, the trade
surplus reached US$ 3.4 billion. In the first 5 months of the year, exports and imports responded
alone for 8% of GDP.
Trade Balance (US$ billion)
250 50
40
200
30
22
150
20
Exports
100
10 Imports
Trade balance
April / May 2010

50
0 Data: US$ billions accumulated
in a 12-month period
119
138
161
198
153
170
121
173
128
148
44
47
48
53
51
48
55
58
60
73
97
33
50
53
60
58
49
56
56
47
48
63
74
91
0 -10
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mai 10 Source: Brazilian Central Bank
76
Ministry
of Finance

Europe is the destination of 33% of Brazilian exports
As a result of a well-succeeded market expansion strategy, carried out through trade missions and international
agreements in the latest years, Brazilian exports and imports are well diversified in relation to the economic regions
around the world. In the latest 12 months up to April, Latin America and European Union have been the main
destinations of the Brazilian manufactured products. Due to the present turbulent times in Europe, a reduction
in the bilateral trade with Euro Zone is expected, redirecting larger volumes of products to the domestic market.
Exports and Imports per type of product and targeted markets (% of total, 12 months accum.)
2010 - April Primary Fuels and Agricultural Industrial Ex % Im %

Products Energy Manufacturing Manufacturing
Exports 11 2 9 14 33%
European Union
Imports 11 30 33%
Exports 2 4 2 9 15%
United States
Imports 3 18 22%
Exports 14 2 1 4 20%
China
Imports 18
April / May 2010

19%
Data: % change from exports
Exports 3 3 27 and imports accumulated
32%
Latin America last 12 months
Imports 4 4 2 15 26%
Source: MDIC/AliceWeb
US$ billion 0 20 40 60 80 100 100% 100% Produced by: Ministry of Finance 77
Ministry
of Finance

South-to-South trade has a growing share in Brazilian trade balance
In 2009, a decrease in Brazilian exports to all major economic blocks has been noted, except for Asia, which
grew 6.6%. The major declines occurred with traditional partners like the European Union (-26.3%) and the
United States (-42.4%). The outlooks of lower economic growth in industrialized nations and the prospects
of great dynamism throughout the emerging market economies have altered the foreign trade landscape to
Brazil, placing the South hemisphere as one of greater importance, when compared to recent years.
Brazilian export’s share per region (% of total)
30
25
2003
20 2004
2005
2006
15
2007
2008
April / May 2010

10 2009
Data: % change
5 Latin American United States Asia Source: Brazilian Central Bank
Mercosur (South American European Union
economic organization) Integration Association (including Porto Rico) (except middle east)
( except Mercosur) Produced by: Ministry of Finance
78
Ministry
of Finance

Brazilian exports
In the 2003 to 2009 period, in accumulated terms, Asia has become the main trade partner to Brazil. Europe
and the United States, with lower growth rates, had their share decreased.
Total exports per region (US$ billions)
15.8% 9.9% 1.0% 9.1% 19.0%
2003
2004
2005
2006
2007
2008
2009
Average Rate of Growth
April / May 2010

2003-2009
Data: US$ billion
Mercosur (South American Latin American United States

European Union
Asia Source: MDIC
economic organization) Integration Association (including Porto Rico) (except middle east)
( except Mercosur) Produced by: Ministry of Finance
79
Ministry
ht
of Finance
lig
gh

Hi
Deficit is financed by foreign investments and domestic capital markets

Differently from other countries, where the main source to finance their external liabilities is indebtedness,
Brazil has its own external liabilities mainly comprised of stocks and direct investments. From 2001 to 2009,
foreign direct investments (FDI) and stocks jumped from 43% to 72% share of GDP, while fixed income
securities and loans have diminished from 55% to 27%.
Funding Sources of the Current Account (% of GDP)

4,0
3,5 3.8
3,0
2,5
2,0 Foreign direct investment
1,5 Foreign portfolio investment
1,0 1.4 Current account
0,5 Data: % of GDP
0,0
-0,5 Source: Brazilian Central Bank and
April / May 2010

Itau-Unibanco
-1,0 Produced by: Ministry of Finance
-1,5 -2.0
-2,0
De 07
Ja 7
Fe 08
M 08
Ap 08
M 08
Ju 8
Ju 8
Au 08
Se 08
Oc 8
No 08
De 08
Ja 8
Fe 09
M 09
Ap 09
M 09
Ju 9
Ju 9
Au 9
Se 09
Oc 9
No 9
De 09
Ja 9
Fe 10
M 10
Ap 10
0
c0
0
0
c0
0
0
l0
0
t0
c0
r1
v
n
b
ar
r
ay
n
l
g
p
t
v
n
b
ar
r
ay
n
g
p
n
b
ar 80
No
Ministry
ht
of Finance
lig
gh

Hi
Foreign Investments and current account

Economic growth expectations since 2007, the investment grade status from April, 2008, as well as
the investment programs have fueled the levels of foreign investments in Brazil. Even in 2009, a year
immediately after the financial crisis, foreign direct investments were somewhat remarkable. For 2010, a
US$ 45 billion of FDI is expected, an amount sufficient to finance the current account deficit.
Foreign Investments and Current Account (US$ million, accum. 12 months)
4,968 10,484 1,735

2004
45,4
5,834
8,720 21,513 1,599

2005
14,170
18,569 13,358 4,045

2006 Foreign direct investments
12,370
24,087 22,732 38,888

Foreign portfolio investments
2007
13,924 Other foreign investments
37,219 44,106 30,477 Current Account balance
2008
Data: US$ million
April / May 2010

13,924
2,799 14,655 4,1138

2009
19,720
* US$ millions accumulated in
a 12-month period untill April
25,076 66,068 22,770
2010*
36,197
Ministry
ht
of Finance
lig
gh

Hi
Foreign direct investments per country

The main foreign investors continue to trust in Brazil’s economic growth and keep their investments, even
with the recent financial crisis. The United States remains as the main country for investments in Brazil.
Nevertheless, a decrease in the flow of foreign investments from Europe is expected as it faces turbulent
times.
Foreign direct investments per country (% of total)
34.7 41.7 39.5 43.7 29.0 34.9

Canada
Japan
4.3 France
0.19
6.6 2.4 5.3 4.2 Germany
3.6 1.5 6.8 4.9 Spain
5.8 3.6 3.2
6.7 2.9 5.2 7.8 9.9 United States
3.4 9.2 1.8
6.4 3.8 6.4 Netherlands
5.6 6.5 10.8 8.2
6.8 2.4 Others
8.7 Total
17.7
15.5 17.5 Data: US$ millions
April / May 2010

21.5 19.9
15.9 * US$ millions accumulated in
15.7
14.8 23.7 10.4 20.6 18.6
2005 2006 2007 2008 2009 2010* Source: Brazilian Central Bank
(US$ 21.6 bi) (US$ 22.2 bi) (US$ 34.3 bi) (US$ 44.4 bi) (US$ 31.7 bi) (US$ 32.1 bi)
Ministry
ht
of Finance
lig
gh

Hi
Foreign direct Investments per economic sector

Service remains the main sector for foreign direct investments in Brazil. There has also been increasing
investments within Industry, Agricultural and Extractive, mainly due to Petrochemical sector.
Foreign Direct Investments - Economic Sector (% of total)
59.7 55.0 46.9 39.2 42.9 44.6
31.5 Services
42.6 37.7
39.3 Industry
38.1 Agricultural and Extractive
30.2
Total
29.2 Data: % of total
April / May 2010

13.8 14.5 a 12-month period untill April
10.1 6.9
(US$ 21.6 bi) (US$ 22.2 bi) (US$ 34.3 bi) (US$ 44.4 bi) (US$ 31.7 bi) (US$ 32.1 bi) 83
Ministry
ht
of Finance
lig
gh

Hi
Foreign direct investment in Agricultural and Extractive sectors

The discovery of Pre-Salt layer has stimulated foreign investments in Petroleum & Natural Gas sectors,
responsible for more than 50% of FDI in Agricultural and Extractive sectors.
Foreign Direct Investment – Agricultural and Extractive (% of total)
13.8 26.9 18.6 7.8 13.9 14.4

10.3
16.8
Petroleum & Natural Gas
40.9 extraction
34.5 Metallic Mineral extraction
53.3 Others
57.8 Total
Data: % of total
April / May 2010

* US$ millions accumulated in
38.6 64.7 81.9 a 12-month period untill April
45.4 28.4 32.3
(US$ 2.2 bi) (US$ 1.5 bi) (US$ 4.8 bi) (US$ 13.0 bi) (US$ 4.6 bi) (US$ 5.7 bi) Produced by: Ministry of Finance 84
Ministry
ht
of Finance
lig
gh

Hi
Foreign direct investments in Industry sector

In Industry sector, after 2008, a large expansion in Chemical Products, Petroleum and Bio Fuels share in total
investments has been observed.
Foreign Direct Investments – Industry (% of total)
Cellulose, paper and products

64.9 43.1 32.8 38.8 28.9 35.9 of paper
Petroleum derivatives and Bio
fuels
Chemical Products
3.5 5.7
1.4
Automobiles, Towage and
10.0 7.1 Motorcar parts
12.2
11.2
19.1 11.5 Metallurgy
10.2 6.1 19.4
Others
2.6 6.4 6.9
3.1 16.0 Total
0.1 15.7
11.7 11.1
Data: % of total
April / May 2010

3.4 2.4
4.8 20.2 34.9 35.6 27.8 19.6
(US$ 6.5 bi) (US$ 8.5 bi) (US$ 13.5 bi) (US$ 14.0 bi) (US$ 13.5 bi) (US$ 12.1 bi)
Ministry
ht
of Finance
lig
gh

Hi
Foreign direct investment in Service sector

The Brazilian financial system soundness has attracted foreign direct investments to the country, with a
share of more than 20% of the total volume invested in the Service sector.
Foreign Direct Investment – Service Sector (% of total)
Building
Information Technology Services
46.5 35.7 36.1 37.9 33.2 37.3 Electricity, Gas and Other Utilities
Insurance, Reinsurance,
Complementary Social Welfare
and Health Plans
5.0 7.7 7.9 5.3 Commerce, except vehicles
1.2 6.3 5.0
1.6 1.2
2.2 6.4 Financial services and other
1.1 6.6 5.2 7.1 activities
19.1 3.2 2.7 6.7
12.2 9.7 3.8 Other services
2.1
6.7 17.1 14.7 Total
12.5 17.1 17.1
Data: % of total
April / May 2010

10.0%
10.0 24.5 28.1 29.3 21.3 23.8
(US$ 13.0 bi) (US$ 12.2 bi) (US$ 16.1 bi) (US$ 17.5 bi) (US$ 13.6 bi) (US$ 14.3 bi) Produced by: Ministry of Finance 86
Ministry
of Finance

Measures Specifications Requirements / Impact Amounts involved
Measures to
Faster return of Return of 50% of PIS/Pasep, Tax credits on average per promote
export federal tax
Cofins, IPI accumulated tax credits Exports’ share of at least 30% of total year (PIS, Cofins) is R$ 13 export
related to exports up to 30 days income in the latest two years. billion, and part of the value
credits after request. is usually compensated. competition
Export revenue Currently the micro and small

The exemption is equal to the threshold enterprises account for 1.2%
exclusion to fit in The firm should have been an
for sales in the domestic market, it of total exports and 48.3%
SIMPLES taxation exporter for at least 4 years.
means, $ 2.4 million per year. in the number of exporting
framework companies.
The actual modality of
drawback suspension includes
The drawback exemption is an additional
Duty drawback inputs from outside in the
option for national inputs, more suitable
Real profit taxation system and amount of US$ 9.5 billion per
exemption in the for mass production and in industries
electronic invoices required. year on average. The usual
domestic market where control of inputs is more complex
drawback exemption will
and costly.
migrate part of this value to
national inputs.
Elimination of Refused requests historical The estimated reduction of
April / May 2010

Average tax credit yoy (PIS, Cofins)
reducing factor on description no more than 15% of the trade balance deficit is
totals R$ 13 billion. Part of it is usually
auto part import total requests in the latest two US$ 6 billion, coming from
compensated.
taxation years. purchase of foreign car parts.
(Continues) 87
Ministry
of Finance

(Continuation)

The Administration has some
funds that provide cover/
EBS – Brazilian Insurance Measures to
insurance to exports but cannot
leverage the amounts involved
Company will be in charge of risk promote
management of the funds in which
Modernization and neither hire reinsurance.
the Government is shareholder and to export
of Public Credit FGIE is a new fund that provides R$ 5 billion, with leverage
Coverage: FGIE and insurance to infrastructure,
provide coverage not covered by the
capacity up to 8 times. competition
market (long-term exports, mortgage
EBS gathering funds for naval,
for low-income classes and working
energy and PPP (Public & Private
capital for micro and small-sized
partnership). A new insurance
companies.
company has also been created
(EBS).
It will be managed by the BNDES credit
Foreign Trade Mobilize R$ 12 billion
division, may be transferred to the
It will allow more flexibility to already managed by BNDES
Insurance Fund Brazilian Company of Guarantee. Without
commercial risk coverage. with the possibility of
(FGCE) discontinuity of the Foreign Trade
leveraging of 7 times.
Guarantee Fund.
It will be conducted by BNDES credit

Brazilian Exim Bank division. It can be transferred to EBS, R$ 12 billion, with leverage
Fee related to risk assumption
(BEB) without discontinuity of the Foreign capacity up to 7 times.
April / May 2010

Trade Insurance Fund (FGCE).
(Continues) 88
Ministry
of Finance

(Continuation)
Interest rate equalization in Measures to

Cost reduction of
pre-shipment financing under promote
the Program of Investment Rate to the borrower: 7% until June
export financing to Support (PSI). PSI aims to boost 30th and 8% up to December 31st,
Value of funding: until export
leverage consumer $ 7 billion.
goods exports
the acquisition, production and 2010. competition
exports of capital goods as well
as technology innovation.
The price of domestic product must be

25% of the similar imported price.
Margin by product or activity will
be regulated. From the US$ 65 billion of
Government government purchases, at
purchases: a Margins will be justified based on least US$ 2.5 billion in the
preference for Loan term: 36 months employment, income, revenue and last 12 months were from
domestic goods and technological development. foreign companies, which
services may be reverted on to the
Products and services with minimum national market.
national content.
Subject to the preference of products
developed with domestic technology.
April / May 2010

89
Ministry
of Finance

Price and Quantum Indexes - Exports and Imports (FUNCEX)
PRICE QUANTUM
(% change from preceding year) (% change from preceding year)
Accum. Acum.
Apr 10 / Apr 09 Apr 10 / Apr 09
12 months 12 months
EXPORTS 19.3 -10.9 10.6 -6.8
Basic goods 20.5 -14.0 -2.8 2.8
Semi-manufactured goods 39.1 -17.4 9.0 -1.5
Manufactured goods 10.2 -5.1 4.7 -17.4
IMPORTS 5.9 -11.1 49.3 -10.0
Intermediate goods 0.1 -8.6 53.6 -15.0
Fuels and lubricants 70.5 -32.3 53.0 -4.8
Capital goods -0.8 -2.3 25.6 -9.3
Durables goods -5.3 -4.0 110.2 12.5
Non-durables goods 5.2 -1.1 22.6 4.3
April / May 2010

Data: % change
Source: FUNCEX
Ministry
of Finance

International Reserves - Uses and Sources
2007 2008 2009 2010* 2007 2008 2009 2010*

Uses -36.6 -50.6 -54.5 -76.0 Sources 36.6 50.6 54.5 76.0
Current Account 1.5 -28.2 -24.3 -45.0 Capital Account 0.8 1.1 1.1 1.0
Balance of trade 40.0 24.8 25.4 17.0 Foreign Direct Investments 34.6 45.1 26.0 38.0
Exports 160.6 197.9 153.0 187.0 Portfolio Investments 39.8 6.3 46.7 39.0
Imports -126.6 -173.1 -127.6 -170.0 Stocks 26.2 -7.6 37.1 26.0
Services -42.5 -57-.3 -52.9 -67.0 Fixed Income 13.5 13.8 9.7 13.0
(Medium and long term)
Net interest -7.3 -7.2 -9.1 -8.0
Disbursements 36.0 31.6 35.8 43.0
Profits and Dividends -22.4 -33.9 -25.2 -35.0 (Medium and long term)
International Travel -3.3 -5.2 -5.6 -7.0 Public sector 3.7 2.4 8.7 8.0
Other services -9.5 -11.0 -13.1 -17.0 Private Sector 32.3 29.2 27.1 35.0
Unrequited transfers 4.0 4.2 3.3 5.0 IMF loans 0.0 0.0 0.0 0.0
Depreciation Brazilian assets abroad -25.2 -23.5 -19.8 na
(Medium and long term) 38.2 -22.4 -30.1 -31.0
Short term and other 38.3 -6.9 11.2 -26.0
Public sector -11.4 -4.2 5.0 -4.0
Gross International Reserves 180.3 193.8 238.5 271.0
Private Sector -26.8 -18.1 -25.1 -26.0
Data: US$ billion
April / May 2010

* Market Forecasts
na= not avaible

Brazilian Economy
OUTLOOK
Fiscal
Policy
Ministry
of Finance
Ministry
of Finance
Fiscal Policy
Guaranteed fiscal balance for 2010
The commitment to the Brazilian government’s fiscal balance is maintained also during 2010, according to
growing revenues and decreasing expenditures during the first four months of the year.
Central Government’s Revenue and Expenditures (% of GDP)
19.9
20
19 18.6
18
17
16
Net revenue from transfers to
States and Municipalities
15
Expenditures
April / May 2010

14 Data: % of GDP, seasonally
adjusted monthly measures
13
Source: Ministry of Finance
98
Ja 8
99
Ja 9
00
Ja 0
01
Ja 1
02
Ja 2
03
Ja 3
04
Ja 4
05
Ja 5
06
Ja 6
07
Ja 7
08
Ja 8
09
Ja 9
Apn 10
0
l9
l9
l0
l0
l0
l0
l0
l0
l0
l0
l0
l0
r1
n
n
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ju
Ja
94
Ministry
of Finance
Fiscal Policy
Central Government Cash strengthened in the first quarter of 2010
The primary surplus of the Central Government from $ 24.7 billion (2.3% of GDP) in the first four months
demonstrates the commitment to compliance with the fiscal target in 2010. Without significant inflationary
risk, the positive trend of the primary surplus in the first four months of 2010 was a result of the increase of
18.3% in revenue.
Central Government’s budget results (12-month period)
CASHÊINÊTHEÊFIRSTÊQUARTER
IncreasedÊtaxÊrevenueÊandÊaÊprimaryÊsurplusÊsufficientÊtoÊmeetÊtheÊgoalÊmarkÊfourÊmonths
CentralÊGovernment«sÊ MainÊChanges
PrimaryÊResult Jan-Apr 2010/Jan-Apr 2009 - In %
InÊmillionÊofÊreais
Revenues 18.3
PrimaryÊResultÊfromÊJanuaryÊtoÊApril Transfers 13.6
2009 Net Revenue 19.3
Expenditures 18.5
19,524.4
Benefits 14.7
2010 Personnel 7.2
Costs and Capital 28.8
24,698.1 Capital 89.4
April / May 2010

JanuaryÊtoÊAprilÊ2010 (R$Êmillion)
272,126.5 44,225.5 227,901.1 203,203.0 24,698.1
TotalÊ
Revenue
TransfersÊtoÊ
statesÊandÊ
NetÊ
Revenue
TotalÊ
Revenue
PrimaryÊ
Results
Data: % change and R$ millions
municipalities
Source: STN/Ministry of Finance
Primary Result / GDP 2.30% Produced by: Ministry of Finance 95
Ministry
of Finance
Fiscal Policy
Fiscal adjustment with economic growth
Unlike 2009, the economy does not need additional incentives. The strong fiscal results will reduce the
nominal deficit and debt while keeping inflation under control.
Public Sector Fiscal Result (% of GDP)
3.8 3.9
3.2 3.4 3.2 3.3 3.2 3.4 3.5 3.3 3.3 3.3 3.3 3.3
2.9 2.1
0.2 0.0 0.1 0.4
-0.1 -1.0
-1.5 -0.3
-0.9 -1.9
-2.8 -2.7
-3.4 -3.3 Primary result
-4.4 -3.4 -3.5 -3.3 Nominal result
April / May 2010

-5.3 -5.5 Data: % of GDP
-5.1
-6.6 -7.0 -5.3 * Ministry of Finance Forecasts
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* 2014* Source: Brazilian Central Bank
96
Ministry
of Finance
Fiscal Policy
Zero nominal deficit in three years
The zero nominal deficit will be reality in 2012, considering the current level of primary surplus (3.3% of
GDP) and sustained commitment to the sustained growth of the country. The direct benefits of improving
the fiscal situation appear to reduce rates interest and less need for public sector borrowing.
Nominal Result (% of GDP)
0.4
0.1
-3.3
-1.5
-1.0
-4.2
-4.6
-3.0
-3.4
-3.5
-2.7
-1.9
-0.3
Primary surplus equivalent to
3.3% of the GDP
April / May 2010

Data: % of GDP
* Ministry of Finance Forecasts
2002 2003 2004 2005 2006 2007 2008 2009 2010 * 2011 * 2012 * 2013 * 2014 * Source: Brazilian Central Bank
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Substantial reduction of public debt
Positive outlook for growth and significant drop in interest rates are the key factors for stabilizing the debt-
GDP ratio in recent years and the next to come, as the current level of primary surplus of 3.3% of GDP. It is
worth mentioning that the required surplus takes into account the convergence of the inflation target.
Public Sector Net Debt (% of GDP)

65
60
55
50
45
40
35
Primary surplus equivalent
to 3.3% of the GDP
April / May 2010

30 Data: % of GDP
25
*Ministry of Finance Forecasts
19 ' 53.3
19 5 50.2
19 ' 44.9
19 7 47.3
19 8 45.5
89 38.9
19 0 40.5
19 1 37.1
19 2 36.8
19 3 32.2
94 30.0
19 5 30.6
96 33.3
19 7 34.3
19 8 41.7
20 9 48.7
20 0 48.8
01 52.6
20 2 60.6
20 3 54.9
20 4 50.6
20 5 48.2
20 6 47.0
20 7 45.1
20 8 38.4
20 09 42.9
20 0 * 40.7
20 1 * 38.1
20 2 * 35.1
20 3 * 31.9
* 28.7
20
84
86
8
8
8
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
14
19
19
19
20
1
1
1
1
19
98
Ministry
ht
of Finance
lig
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Fiscal Policy
Hi
Public Sector Net Debt
The Public Sector Net Debt (DLSP) has fallen consistently in recent years, accumulating a reduction of 18.5
percentage points of GDP since December 2002. Despite the increase occurred in 2009, the debt is below pre-
crisis period levels, unlike the world’s largest economies. Since late 2008, 0.5% of GDP in DLSP is linked to
Brazil’s Sovereign Fund (FSB), which represents public savings for investments in Brazil and abroad, combating
the effects of possible economic crises and assisting projects of strategic interest of the country abroad.
Public Sector Net Debt (% of GDP)
70
60.6
60
43.9
50 42.2
37.9
40
29.3 Consolidated Public Sector
30
Central Government
18.9 19.8
20 12.7 Subnational Governments
State-owned companies
April / May 2010

10
10.4 0.2 Data: % of GDP
0
* Position in April 2010
-10
1994 1996 1998 2000 2002 2004 2006 2008 2010* Source: Brazilian Central Bank
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Low foreign debt
Despite having foreign debt, Brazil is now a net creditor in foreign currency, which makes the country much
less vulnerable to exchange rate shocks.
Foreign Debt* (% of GDP)
60
50 Gross External Debt

Net External Debt
40
Data: % change from the
preceding year, accumulated in
30 12 months
20 * External Debt Registered and
12.0 Unregistered, private and
public
10
April / May 2010

** Position in February 2010
0
-3.2 Produced by: Ministry of Finance
-10
**
7
99
20 09
1
73
7
79
3
85
87
9
91
93
95
10
9
0
7
19
19
19
20
20
20
20
20
19
19
19
19
19
19
19
19
19
19
19
19
100
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
and the relationship between exchange rate during the global crisis
In the past, the currency crisis materialized in the depreciation of domestic currency had profoundly negative
impacts on the public debt, preventing the Government to adopt counter cyclical fiscal policies. Today,
by contrast, the exchange rate has negative relationship with debt, since the high level of international
reserves represents buffers against shocks.
Public Sector Net Debt (% of GDP) and Exchange Rate (R$/US$)

46,0 3,0
2,8
43,6 2,6
42.4
2,4
41,2 2,2
2,0
38,8 1,8
1.8 1,6 Public Sector Net Debt (PSND)
( % of GDP)
April / May 2010

36,4 1,4 Exchange Rate (R$/US$)
1,2 Data: %of GDP and R$/US$
34,0 1.0
Ap 09
M 09
Ju 9
10
Fe 08
M 08
Ap 08
M 08
Ju 8
08
Au 08
Se 8
Oc 08
No 08
De 8
Ja 8
Fe 09
M 09
09
Au 09
Se 9
Oc 09
No 09
De 9
Ja 9
Fe 10
M 10
0
g0
v0
c0
g0
v0
c0

n
b
ar
r
ay
n
r
ay
l
n
b
ar
n
l
p
t
n
b
ar
Ju
Ju
Ja
101
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Improvements in the Federal Public Debt Profile
Following the continuous improvements in the Federal Public Debt profile, FPD showed an increase of 6.0%,
from R$ 1,495 billion in March to R$ 1,585 billion in April. National Treasury emphasized the net issuance
and interest appropriation based on the objectives of minimizing their costs and maintaining long-term
risks into prudent levels. The domestic and foreign demand for bonds is a reflection of confidence in the
good performance of the economy and debt management in Brazil.
Federal Public Debt Profile (%)
100 5.7
32.2 16.3
80 27.7
16.4
10.3
60
Exchange
40 46.6 42.3 33.9
Price Index
Interest Rate
April / May 2010

20 Prefixed
Data: % share
9.6 23.1 31.7
0
Source: STN/Ministry of Finance
04
05
06
07
08
09
Ab 0
0
1
r1
n
n
Ja
Ja
Ja
Ja
Ja
Ja
Ja 102
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Composition of Public External Debt
The robustness of the macro fundamentals of the Brazilian economy has enabled the country to become a
net external creditor and to lengthen its foreign debt.
Public External Debt (R$ billion)
90
80
70
19.6
60
50 2.6 11.2
40 Contractual Debt
30 International
50.5 Market Raising
42.7
April / May 2010

20
Restructured Debt
10 Data: R$ billion
0
Source: STN/ Ministry of Finance
De 7
De 8
De 9
De 0
Ju 6
Ju 7
Ju 8
Ju 9
De 1
De 2
De 3
De 4
De 5
Ju 0
Ju 1
Ju 2
Ju 3
Ju 4
De 6
Ju 5
Ju 6
De 7
Ju 7
De 8
De 9
Ju 8
ar 9
10
9
0
c9
c9
c9
c9
0
c0
c0
c0
c0
c0
0
c0
c0
0
c0
0
c0
M c0
n
n
De
103
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Issuances in the foreign market

Return rates of foreign issues have reduced consistently over the past few years. The improvement in country
risk ratings are due to the improvement in the structure of the FPD, the continuity of economic policies,
the remarkable performance of the Brazilian economy during the global financial crisis, the significant
reduction in external vulnerability and the future perspectives of continued favorable country growth.
Return Rates of Bond Issuances (30-year-term) (% yoy)
Global 2034 (Troca Global 2030)

15
Global 2037 (Exchange Offer)

Global 2027
10.9%
Global 2034 *
Global 2034 **
Global 2030
13.1%
Global 203
12
Global 2030**
12.5%
8.74%
Global 2037
Global 2037 *
Global 2037 ***

Global 2037 **
8.8%
8.3%
8.2%
Data: % change from the
Global 2027 **
10.3%
7.6%
Global 2041
preceding year
7.1%
6.8%
6.6%
6.4%
* Reopening
5.8%
April / May 2010

** 2nd Reopening
6
**3rd Reopening
Source: STN / Ministry of Finance

3 Produced by: Ministry of Finance
Jun 97 Mar 98 Mar 00 Mar 00 Jan 04 Jun 05 Dec 05 Jan 06 Mar 06 Jun 06 Aug 06 Jan 07 Aug 09 Oct 09 104
Seção do caderno: PF Título do Gráfico: Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
Fonte: STN/Ministério da Fazenda Source:

Bondholders
Dados: % e R$ bilhões Data: % c
Banks and pensionLegenda: Receitas
funds remain the main holders líquidas
of the Federal dedomestic
Government’s transferências
bonds. a Estados e Municípios
Despesas totais Expenditures
Bondholders (% of total and R$ billion)

OBS:
Insurance Companies
Nonresident 55.4 (3.78%)
126.4 (8.63%)
Others
37.1 (2.53%)
Pension Funds
228.7 (15.62%) Banks
589.9 (40.28%)
April / May 2010

Funds Data: % of total and R$ billion
427.0 (29.16%)
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
General Government Domestic Debt
The domestic debt has grown in recent years in contrast to the shrinkage of foreign debt and the expansion
of the Central Bank’s repo operations, i.e. by factors unrelated to fiscal policy.
General Government Domestic Debt (% of GDP)
9.8 2.0 3.3 7.0 14.5 11.1

5.7 3.7 10.8
Treasury Debt and other debts

Central Bank Debt and Repo
Operations
April / May 2010

Data: % of GDP
38.3 41.8 41.6 45.8 46.8 46.5 42.3 44.8 46.1 * Position in April 2010
2002 2003 2004 2005 2006 2007 2008 2009 2010** Source: Brazilian Central Bank
106
Ministry
ht
of Finance
lig
gh
Fiscal Policy
Hi
General Government Gross Debt
The General Government Gross Debt, including the bonds in the Monetary Authority, remains relatively
stable and below the level recorded in 2002.
Public Sector Liabilities and

General Government Gross Debt (% of GDP)
New Methodology * 2001 2002 2003 2004 2005 2006 2007 2008 2009 p.p. PIB
General Government Gross Debt 62.5 67.3 61.7 56.7 56.7 56.4 58.0 57.9 62.8 0.3
Domestic Debt 48.6 48.0 47.5 45.4 47.8 50.1 53.6 53.1 59.2 10.7
Treasury Debt 36.6 36.0 39.6 39.5 44.1 45.3 45.3 41.2 43.6 7.0
Central Bank Debt and repo 9.0 9.8 5.7 3.7 2.0 3.3 7.0 10.8 14.5 5.4
operations
Other debts 2.9 2.2 2.2 2.1 1.7 1.5 1.3 1.1 1.2 -1.7
External debt 13.9 19.2 14.2 11.4 8.9 6.4 4.4 4.8 3.5 -10.4
Central Bank’s and State-owned
7.0 9.4 7.9 7.1 6.4 5.9 5.9 3.8 3.7 -3.2 Data: % of GDP
company’s liabilities
State-owned companies’ debts 5.6 5.6 4.6 3.7 3.0 2.4 2.1 1.9 1.7 -3.9 * Methodology from 2007,
replicated for the 2000-2006
April / May 2010

Deposits at Central Bank 1.4 3.7 3.4 3.4 3.4 3.5 3.8 1.9 2.0 0.6
period, including Brazilian
Monetary Base 4.1 5.0 4.3 4.6 4.7 5.1 5.5 4.9 5.3 1.2 Central Bank securities debt
Total Liabilities 73.6 81.6 73.9 68.4 67.9 67.4 69.4 66.6 71.8 -1.8
107
Ministry
of Finance
Fiscal Policy
Cycles of institutional reform before the Fiscal Responsibility Law
60’s • Reform of public finance system (Law No. 4.320/64, structure and concepts of accounting
and budget plans)
80’s • Creation of the National Treasury (1986)

• Integrated System of Financial Administration of the Federal Government (SIAFI)
also organizes the budget and accounting system of the Federal Government
• National Treasury Single Account
• Federal Constitution (1988): Differentiation of fiscal and monetary accounts (National Treasury
and Central Bank) and the prohibition of monetary financing
• Changes in the subnational relationship (tax transfers of resources and accountability)
• Entrance of civil servants through exams and titles
• Budget Reform:
• PPA – Multi-Year Plan
• LDO – Budget Guidelines Law
• LOA – Annual Budget Law
90’s • State Reform: Public Administration Reform and Social Security Reform
• Inflation Control: Real Plan
April / May 2010

• New changes in the subnational relationship (minimum spending on health and education)
• Refinancing of State debt (1997)
• Since 1999: economic policy = floating exchange rate regime + inflation targeting regime +
+ primary surplus target fiscal rule
108
Ministry
of Finance
Fiscal Policy
Improvement in the Public Finance
The Fiscal Responsibility Law was approved in 2000 and is considered a landmark in the Brazilian fiscal policy.
By introducing clear benchmarks for the state finances, government spending and debt refinancing, the Law
allowed greater control of public accounts. At the Federal level, the main results are the convergence of the
debt-GDP ratio, reversing trend of growth in Social Security deficit, higher Social Security benefits and constant
personnel expenses. All have ensured the best profile of spending aiming the good quality of public spending.
Public Finance (% of GDP)
25
21.7
24.0
18.9
20
16.8
13.9 18.6
15 Total Revenues of Central
15.7
Government
13.4 Total Expenses
10 7.2 Social Security Benefits
6.0
5.1 5.1 Active and Retired Personnel
April / May 2010

5 Data: % of GDP
4.8 4.6 4.8
4.8 * Position in april 2010
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: STN / Ministry of Finance
109
Ministry
of Finance
Fiscal Policy
Central Government Revenues
The level of Primary Revenue depends on the Constitutional and Legal Transfers, and Income Transfers. Both
transfers have showed increases of 3.9 percentage points of GDP over the period 2002-2009, while the Net
Primary Revenue decreased by 0.4 pp of GDP.
Central Government Revenues (% of GDP)
25
23.8
21.7
20 19.7 Gross Revenues
Primary Revenue
Net Revenues from Constitu-
17.9 tional and Legal Transfers
15 Primary Net Revenues of
Income Transfers
April / May 2010

Data: % of GDP
11.0
10.6 * Position in April 2010
10
2002 2003 2004 2005 2006 2007 2008 2009 2010* Source: IPEA
Ministry
of Finance
Fiscal Policy
Federal revenues
The formalization of labor market and increased business profitability, coupled with increases in industrial
output and sales volume, have increased Federal Revenues due to tax collection more directly related to the
expansion of economic activity.
Federal Revenues (%)
30 20
15.3
21 13.9 14.1 15
13.0 13.3
11.0 11.0
10
12 7.5 7.7
4.9 5
3.3 4.3 % real change from
2.6
3 preceding year, same month
7.5 9.6 0.3 3.1 19.0 2.9 12.3 12.0 5.0 16.8
-0.5 0 % nominal change from
-2.1 -4.6 -6.5 -11.1 -0.7 -6.5 -1.2 -1.5 -1.0 -11.5 -1.6
-5.7
preceding month, seasonally
-6 -7.4 -7.0 -7.0 -3.1 adjusted
April / May 2010

-5
Data: % real and
-15 -10 nominal changes
Source: RFB / Ministry of Finance
9
10
10
10
0
09
09
M 9
09
09
9
09
9
08
08
8
09
r1
t0
v0
c0
r0
l0
g0
v0
c0
ar
n
b
p
n
ar
ay
n
p
Ju
Oc
Oc
Ap
Ap

De
De
No
No
Au
Ja
Fe
Se
Ja
Fe
Ju
Se
M
M
111
Ministry
of Finance
Fiscal Policy
Expenditure of the Central Government
In the Brazilian public expenditure framework, it is possible to divide Federal primary expenditures. Since
2002, Cash Transfers growth has guaranteed to classes more vulnerable to shocks the conditions for coping
with moments of volatility. In contrast, current expenditures called Public Operating System such as operating
general services, as well as Personnel and Social Charges remain constant over the past years.
Total Expenditures (% of GDP)
10
9.07
8
6.89
6
4.81
Income Transfers
4.79
Personnel Expenses
4
3.52 Costs Expenses
3.19 Capital Expenses
April / May 2010

2 Data: % of GDP
0.83 1.14
* Position of April, 2010
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 Source:SPE/ Ministry of Finance
Ministry
of Finance
Fiscal Policy
Public investment grows at the same time that PAC goes forward
Substantial growth in public investment has occurred since 2006. Considering only the first 4 months of the
year, public investment grew from $ 6.8 billion in 2009 to $ 12.8 billion in 2010, an increase of 89%. In fact,
relevant changes, such as economic growth, restructuring of infrastructure, employment generation and social
inclusion, have been possible to overcome weaknesses in the country, boost productivity and reduce inequality.
Public Investment (% of GDP)
4.6 4.5 Usiminas

CSN
4.0
3.8
3.6 3.6
Embraer
3.3 3.3 3.3 3.3 3.4
3.0 3.0 Vale 3.0
2.8
2.5
2.4 2.3
Forecasts
2.3 2.3 2.2
2.1 2.0 State-owned Companies
1.9
3.0 3.0
1.7
1.5 1.5
1.7 Federal Investment
1.6 1.4 1.4
2.3 1.8 1.3 Privatization
1.9 2.2
April / May 2010

1.5 1.8 1.3
1.1 1.4
1.5 1.3 0.9 1.1 Data: % of GDP
2.7 2.6 1.6 1.5 0.8 1.0
0.8 1.1 1.0 1.0
* IPEA Forecasts
0.7 1.3 1.5 1.5 0.7 1.1 1.2 1.0 1.4 1.1 0.6 0.6 0.8 0.9 0.5 0.6 0.8 0.9 0.4 0.4 0.5 0.7 0.8 0.9 1.1 1.2
Source: IPEA
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
20 0
20 *
20 *
20 *
20 *
*
11
12
13
14
15
1
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20

Ministry
of Finance
Fiscal Policy
Government consumption under control
Government consumption have remained stable around an average of 3.88% of GDP between 2003 and
2008. When considering subclasses of consumption, there have been influences from wages and other
liabilities, such as payments from court rulings. The intermediate consumption, which represents the cost
of purchased goods and services, has remained the same in real terms and fell as a proportion of GDP during
the period between 2002 and 2009.
Central Government Consumption (% of GDP)
2.5
2.4
2.2 2.2 2.2 2.2 2.2 2.2
2.1
1.8
1.7 1.7 1.7 1.7
1.6 1.6
Salaries of active servers

Other government
April / May 2010

consumption
Data: % of GDP
2002 2003 2004 2005 2006 2007 2008 2009 Source: IPEA
Ministry
of Finance
Fiscal Policy
Evolution of Transfers from Government
Between 2002 and 2009, intergovernmental transfers from Federal Government to subnational entities
have shown a 50.1% real growth. The element has declinee during the last year due to the adverse effects
from the economic crisis on the tax collection and legal and constitutional transfers linked to it. The transfers
linked to education and health programs grew 118.8% yoy, while voluntary transfers have been constant
as a proportion of GDP.
Transfers from Government (% of GDP)
Legal and constitutional

transfers
Voluntary transfers
Transfers to education and
April / May 2010

health programs
0.4
0.4
0.4
0.3
0.3
Data: % of GDP
4.0
0.7
0.9
3.7
0.9
3.7
1.1
4.1
1.1
4.1
1.1
4.1
1.3
4.5
0.6
1.3
4.1
0.6
1.4
2002 2003 2004 2005 2006 2007 2008 2009 Source: IPEA
115
Ministry
of Finance
Fiscal Policy
Transfers to households
Transfers to households have expanded the most in absolute terms since 2002. Responsable for about half
of the expansion of non-financial costs, they consider current increases in the minimum wage, which is one
of the basis for more than half of them, and the social programs of income transfers. The expense represents
the portion that includes payments for civil servants and other social benefits (social security and welfare).
Transfers to Families (% of GDP)
Other social benefits

Active and retired public
servants’ benefits
April / May 2010

Household Transfers
Data: % of GDP
10.2
10.1
10.0
10.9
8.9
2.1
6.9
9.2
1.9
7.3
9.4
1.9
7.5
9.8
1.9
7.9
1.9
8.3
1.9
8.3
1.8
8.1
2.0
8.9
2002 2003 2004 2005 2006 2007 2008 2009 Source: IPEA
116
Ministry
of Finance
Fiscal Policy
Improving the social security administration
In recent years, the Social Security deficit shrank to the equivalent of 1.4% of GDP. The reversal in the trend
growth of the deficit is due in part of the formal labor market and growth in revenues. Additionally, the
downward trend shows the improvement of management actions focused on social security, the rules for
granting pensions, the criteria used in evaluations of medical expertise for grant of sickness benefit and the
allowance of continuous activity of beneficiaries who are already entitled the full pension.
Social Security (% of GDP)
8 2,0
1,6
7
1.4
1,2
6
0,8 Deficit
Revenue
April / May 2010

5
0,4 Benefits
Data: % of GDP
4 0,0
8
01
04
07
98
07
Apn 10
0
t9
l9
r0
t0
l0
r0
t0
l0
r0
l0
r0
r1
n
n
n
ut
Ju
Ju
Ju
Ju
Oc
Oc
Oc
Ap
Ap
Ap
Ap
117
Ja
Ja
Ja
Ja
Ja
Oc
Ministry
of Finance
Fiscal Policy
Public Sector Net Debt - Balances at the end of each period
Public Sector Net Debt R$ million % of GDP
April April
2007 2008 2009 2007 2008 2009
2010 2010
I. Public sector 1,200,799 1,153,631 1,345,325 1,370,705 45.12 38.39 42.80 42.18
I.1. Central Government 816,681 728,327 932,535 951,442 30.69 24.24 29.67 29.28
I.2. States and Municipalities 373,323 414,954 406,404 411,381 14.03 13.81 12.93 12.66
I.3. State-Owned Enterprises 10,795 10,351 6,385 7,881 0.41 0.34 0.20 0.24
Composition of % of Public Sector Net Debt

I. Floating rate 47.2 58.2 62.0 67.2
II. Fixed rate 38.9 35.3 35.8 36.6
III. Inflation rate linked 27.4 32.6 29.9 31.8
IV. Exchange rate linked -17.5 -30.3 -24.7 -25.5

Data: R$ million and % of GDP
April / May 2010

IV.1. Internal Debt -0.3 -0.9 -2.5 -2.5
* Balances at the end of
IV.2. Foreign debt -17.2 -29.4 -22.2 -23.0
each period
V. Others 4.1 4.2 -3.1 -4.2
118
Ministry
of Finance
Fiscal Policy
Central Government Results - Above the line
R$ million % of GDP
Central Government Results Yearly
Apr10 Accum. 12-month Yearly Accum. 12-month
2009 2010 2009 2010
I. TOTAL REVENUE 78,570 272,127 781,443 23.80 25.35 23.52 24.05
I.1. Treasury revenues 62,240 210,630 591,439 18.26 19.62 17.73 18.20
I.2. Social Security revenues 16,330 61,496 190,004 5.54 5.73 5.79 5.85
II. TRANSFERS TO STATES AND MUNICIPALITIES 11,607 44,225 132,995 4.03 4.12 4.06 4.09
II.1. Constitutional transfers (IPI, IR and others) 8,312 32,285 98,236 3.27 3.01 3.10 3.02
II.2. LC 87/96 and Exports Compensation Fund 163 650 3,900 0.07 0.06 0.12 0.12
II.3. Others 3,132 11,291 30,859 0.69 1.05 0.83 0.95
III. TOTAL NET REVENUE 66,963 227,901 648,448 19.77 21.23 19.46 19.95
IV. TOTAL EXPENDITURE 50,387 203,203 604,059 17.75 18.93 18.21 18.59
IV.1 Cost Expenses 36,965 154,651 459,199 14.06 14.41 14.01 14.16
IV.1.1. Personnel and social charges 11,972 53,493 155,225 5.17 4.98 4.83 4.78
IV.1.2. Payroll 24,276 97,508 295,261 8.80 9.09 9.00 9.11
Social Security benefits - RGPS 19,342 78,724 234,945 7.10 7.33 7.15 7.23
Disabled and retired special benefits - LOAS / RMV 1,835 7,230 20,125 0.63 0.67 0.60 0.62
Salary Allowance (SA) and Unemployment Insurance (UI) 1,932 7,104 27,415 0.68 0.66 0.86 0.84
Bolsa Familia Allowance 1,167 4,450 12,776 0.39 0.41 0.38 0.42
IV.1.3. Other Cost Expenses 716 3,649 8,712 0.09 0.34 0.19 0.27
FAT (excluding SA and UI) 44 176 507 0.02 0.02 0.02 0.02
Government Credit Operations and Liabilities Reordering 370 2,490 5,231 -0.04 0.23 0.07 0.16 Data: R$ million and % of GDP
Subsidies for Regional Funds 303 983 2,974 0.11 0.09 0.10 0.09
IV.2 Capital Expenses 3,078 11,617 37,795 0.62 1.08 1.02 1.16 * inclui pagamentos de restos
IV.2.1. Paid Investment* 3,078 11,617 37,795 0.62 1.08 1.02 1.16 a pagar
April / May 2010

IV.3 Other Cost and Capital Expenses** 10,245 36,547 105,852 3.07 3.44 3.18 3.27
V. TRANSFERS FROM TREASURY TO CENTRAL BANK 100 388 1,213 0.04 0.04 0.04 0.04 ** inclui despesas do
VI. CENTRAL GOVERNMENT PRIMARY RESULT 16,576 24,698 44,389 2.02 2.30 1.25 1.37 Banco Central
VI.1. National Treasury 19,669 42,100 89,961 3.59 3.92 2.63 2.77
VI.2. Social Security -3,012 -17,228 -44,941 -1.57 -1.61 -1.36 -1.38
VI.3. Central Bank -81 -175 -631 -0.01 -0.02 -0.02 -0.02 Source: STN / Ministry of Finance
VII. METHODOLOGICAL ADJUSTS 60 220 794 0.08 0.02 0.04 0.02 Produced by: Ministry of Finance 119
Ministry
of Finance
Fiscal Policy
Public Sector Results - Under the line
Public Sector Results R$ million % of GDP
April Yearly Yearly Accum. 12-month

12-month
2010 Accum. 2009 2010 2009 2010
I. Primary Result 19,789 36,617 70,375 3.18 3.41 2.05 2.17
I.1.Central Government 16,528 25,453 45,519 2.32 2.37 1.35 1.40
I.2. States and Municipalities 3,611 12,790 24,210 0.99 1.19 0.67 0.74
I.3 State-Owned Enterprises -350 -1,626 645 -0.12 -0.15 0.03 0.02
I.3.1. Federal -495 -2,657 -2,469 -0.21 -0.25 -0.06 -0.08
I.3.2. State 128 1,033 2,979 0.07 0.10 0.08 0.09
I.3.3. Municipal 17 -2 135 0.01 0.00 0.01 0.00
II. Nominal Interest * -14,485 -59,464 -175,765 -5.47 -5.54 -5.38 -5.41
III. Nominal Result * 5,304 -22,847 -105,391 -2.28 -2.13 -3.45 -3.24
April / May 2010

Data: R$ million and % of GDP
* No exchage devaluation
Ministry
of Finance
Glossary – Companies
Accenture Accenture Economic Consulting CAIXA Caixa Econômica Federal IIF Institute of International Finance
ACSP São Paulo Trade Association CAN National Agriculture Confederation ILO International Labor Organization
Brazilian Association of Savings and Center for Advanced Studies in Applied INSS National Social Security Institute
ABECIP
Mortgage Credit Entities Capea/Esalq Economics/ Luiz Queiroz High School
of Agriculture IPEA Institute for Applied Economic Research
Brazilian Association of the Machines and
Abimaq
Equipment Industry LCA Strategic Solutions in Economics
CNI National Industry Confederation
Brazilian Association of Manufacturers of Ministry of Development, Industry and Foreign
ABRACICLO Conab National Supply Company MDIC
Motorcycles, Bikes and Similar products trade
Brazilian Association of the Industry of Copom Monetary Policy Committee Ministry of Planning, Budget and
Abramat MPOG
Construction Materials Management
CVM Securities Commission
ACSP São Paulo Commercial Association MTE Ministry of Labor and Employment
Inter-union Department of
National Association of Automotive Vehicle DIEESE
Anfavea Socioeconomic Statistics and Studies Organization for Economic
Manufacturers OECD
Cooperation and Development
EIU Economist Intelligence Unit
ANP National Petroleum Agency S&P 500 Standard and Poor"s 500
Fed Federal Reserve
Bacen Brazilian Central Bank SECEX Foreign Trade Secretariat
FEF Fiscal Stabilization Fund
BCE European Central Bank SOF Federal Budget Secretariat
FGV Getulio Vargas Foundation
BEA U.S. Bureau of Economic Analysis RFB Federal Revenue Secretariat
Social Policies Center at the
FGV-CPS
BID Inter-American Development Bank Getulio Vargas Foundation STN National Treasury Secretariat
International Bank for Reconstruction FIPE Institute of Economic Research Foundation
Bird
and Development
IMF International Monetary Fund
BLS Bureau of Labor Statistics
April / May 2010

FOMC Federal Open-Market Committee
Bovespa Stock and Future Markets Exchange and
BM&F Bovespa FSE Emergency Social Fund
São Paulo Stock Exchange Index
National Bank of Economic and Social Funcex Foreign Trade Studies Center Foundation
BNDES
Development
IBGE Brazilian Institute of Geography and Statistics
BNDESPar BNDES Participações S.A.
121
Ministry
of Finance
Glossary – Terms
ACC Advances on Exchange Contracts ICMS Tax on the Circulation of Goods and Services LRF Fiscal Responsibility Law
Bolsa Familia Family Welfare Payment System based on LSPA Systematic Farm Production Survey
Program conditional cash transfers IED Direct Foreign Investment
LTN National Treasury Bills
System of Registration of Credit Operations with IGP General Price Index / FGV
Cadip
the Public Sector NTN National Treasury Note
IGP-DI General Price Index – Internal Supply / FGV
Caged General File of the Employed and Unemployed NUCI Installed Capacity Rate
IGP-M General Price Index – Market / FGV
CCR Reciprocal Credit and Payment Agreement PEA Economically Active Population
Inec Consumer Expectation National Index
Contribution on Intervention in the Economic PF Individual Person
Cide INPC National Consumer Price Index / IBGE
Domain
PIA-Empresa Annual Industrial Survey – Company
CNAE National File of Economic Activities IPA Wholesale Price Index / IBGE
PIA-Produto Annual Industrial Survey – Product
CNI National Confederation of Industry IPA-DI Wholesale Price Index – Internal Supply / FGV
PIB Gross Domestic Product
Cofig Export Financing and Guarantee Committee IPA-Industrial Wholesale Price Index – Industry
PIM Monthly Industrial Survey / IBGE
Cofins Contribution to Social Security Financing IPA-M Wholesale Price Index – Markets / FGV
Monthly Industrial Survey of Employment
Wholesale Price Index – Overall Supply – PIMES
Contribution to Social Security Financing due by IPA-OG-PI and Wages / IBGE
Cofins Import Industrial Products
the Importer of Goods and Services
PIM-PF Monthly Industrial Survey – Physical Output
CPI Consumer Price Index IPC Consumer Price Index / IBGE
PIS Social Integration Program
DI Interbank Deposits IPCA Broad National Consumer Price Index / IBGE
PMC Monthly Trade Sector Survey / IBGE
Broad National Consumer Price Index –
DRU Release of Federal Government Entitlements IPCA-PI
Industrial Products PME Monthly Employment Survey / IBGE
FAT Worker Suport Fund IPC-Br Consumer Price Index – Brazil PNAD National Survey by Household Sample / IBGE
April / May 2010

GFCF Gross Fixed Capital Formation IPI Industrialized Products Tax RGPS Social Security General System
FCVS Wage Variation Compensation Fund IRPF Income Tax on Individual Persons Selic Special System for Settlement and Custody
FGC Credit Guarantee Fund ITR Rural Land Tax TJLP Long-Term Interest Rate
Icei Industry Businessman Confidence Index LFT Treasury Financing Bills TR Reference Interest Rate
122
Ministry
of Finance
President of the Republic: Luiz Inácio Lula da Silva

Minister of Finance: Guido Mantega
Deputy Minister of Finance: Nelson Machado
Production and Execution

Special Advisor to the Minister: Marcelo Fiche
Advisors to the Minister: Lígia Ourives, Adriano Seabra, Ilan Souza and Marcus Pessoa
Trainee: Jorge Eduardo Taunay
Art
Ministry of
Visual Project and Final Art: Viviane Barros and Alline Luz Finance
Layout development: André Nóbrega, Alline Luz and Viviane Barros
Technical Support
Economic Policy Secretariat - SPE
International Affairs Secretariat - SAIN
April / May 2010

National Treasury Secretariat - STN
Emílio Garófalo Filho
Ministry of Finance
www.fazenda.gov.br
123

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Ministry of

Mass Consumer Market 25

Interest Rates and Credit 43

Reduction of External Vulnerability 69

April / May 2010

Average GDP Growth (% yoy)

April / May 2010

0.0 0.3 -0.2 Source: IBGE

Composition of GDP Expansion Q1 2010 / Q4 2009 (% qoq, seasonally adjusted)

Data: % change from preceding

April / May 2010

GDP Gross Fixed Household Government Exports Imports Source: IBGE

Evolution of GDP (% qoq)

April / May 2010

Savings and Investment rate (% of GDP)

April / May 2010

April / May 2010

Composition of GDP Growth (% yoy)

April / May 2010

Industry Confidence Index (points, seasonally adjusted)

April / May 2010

r1 Produced by: Ministry of Finance

Industrial Output Index (Jan07 = 100)

115 111.8 111.6

April / May 2010

Industrial Production by Categories of Use (% yoy)

April / May 2010

Semi and Consumption Industry Intermediate Capital Durable Source: IBGE

Capital Goods (% yoy)

April / May 2010

Produced by: Ministry of Finance

Consumer Confidence Index (points, seasonally adjusted)

April / May 2010

Data: points, seasonally adjusted

Produced by: Ministry of Finance

Licensing of new vehicles (thousand units, daily average)

Low IPI Low IPI

April / May 2010

Sales Volume in Retail Trade (% yoy)

April / May 2010

Real Retail Sales (% mom)

Weight Activity Mar 10 / Feb 10

5.0 Construction material 3.0

April / May 2010

Monthly Survey of Trade Seasonally adjusted Before seasonal adjustment

Basis: Preceding month: Yearly 12-month

Retail Trade 1.6 15.7 12.8 8.0

April / May 2010

change in the preceding

April / May 2010

Seasonally adjusted Before seasonal adjustment

April / May 2010

Basis: March April May Yearly 12-month

Forward Indicators for Industrial Output

April / May 2010

Source: FGV, Anfavea, ABPO and ABCR

Change (%) Change from preceding year (%)

April / May 2010

Mass Consumer Market

46.3 47.5 46.7 52.0 53.8

Class A/B (from R$ 4,807)

April / May 2010