Growth, Interest Rates and BRL - Votorantim Corretora ... · Source(s): IBGE and Votorantim...
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Growth, Interest Rates and BRL January 2013
Transcript of Growth, Interest Rates and BRL - Votorantim Corretora ... · Source(s): IBGE and Votorantim...
Growth, Interest Rates and BRL
January 2013
Growth: Long-Term Constraints GDP (%)
Source(s): IBGE and Votorantim Corretora.
Labor force, tax burden and infrastructure bottlenecks are long-term constraints.
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-5,0%
-3,0%
-1,0%
1,0%
3,0%
5,0%
7,0%
9,0%
11,0%
13,0%
15,0%
19
52
1
95
4
19
56
1
95
8
19
60
1
96
2
19
64
1
96
6
19
68
1
97
0
19
72
1
97
4
19
76
1
97
8
19
80
1
98
2
19
84
1
98
6
19
88
1
99
0
19
92
1
99
4
19
96
1
99
8
20
00
2
00
2
20
04
2
00
6
20
08
2
01
0
20
12
GDP Potential GDP
Investments Following commodities cycle (YoY %)
3
Source(s): IBGE and Votorantim Corretora.
Investments cycle has also followed the commodity price cycle.
10,0%
12,0%
14,0%
16,0%
18,0%
20,0%
22,0%
24,0%
26,0%
28,0%
19
47
19
50
19
53
19
56
19
59
19
62
19
65
19
68
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
Credit Cycle is the Main Driver Credit grants and GDP (real terms)
Source(s): Central Bank and Votorantim Corretora.
Credit has an increasing relevance to explain the short-term economic cycle. We see credit bouncing back, but still below the trend.
4
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20
01
-IV
20
02
-II
20
02
-IV
20
03
-II
20
03
-IV
20
04
-II
20
04
-IV
20
05
-II
20
05
-IV
20
06
-II
20
06
-IV
20
07
-II
20
07
-IV
20
08
-II
20
08
-IV
20
09
-II
20
09
-IV
20
10
-II
20
10
-IV
20
11
-II
20
11
-IV
20
12
-II
20
12
-IV
20
13
-II
20
13
-IV
Grants - real terms (RHS) GDP (LHS)
Credit Depends on Delinquency Credit grants and delinquencies
Source(s): Central Bank and Votorantim Corretora.
Delinquency has already peaked. We see a mild relief, given labor market performance and lower interest rate.
5
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0% 5,0
5,5
6,0
6,5
7,0
7,5
8,0
8,5
9,0
no
v-0
1
mai
-02
no
v-0
2
mai
-03
no
v-0
3
mai
-04
no
v-0
4
mai
-05
no
v-0
5
mai
-06
no
v-0
6
mai
-07
no
v-0
7
mai
-08
no
v-0
8
mai
-09
no
v-0
9
mai
-10
no
v-1
0
mai
-11
no
v-1
1
mai
-12
no
v-1
2
Delinquency (LHS) Real Grants (RHS, reverse order)
Delinquency Household debt service ratio (YoY %)
Source(s): Central Bank and Votorantim Corretora.
Household debt service ratio is a leading indicator for NPL. Real income and interest rates have moved index down.
6
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
5,0
5,5
6,0
6,5
7,0
7,5
8,0
8,5
9,0
jan
-08
abr-
08
jul-
08
ou
t-0
8
jan
-09
abr-
09
jul-
09
ou
t-0
9
jan
-10
abr-
10
jul-
10
ou
t-1
0
jan
-11
abr-
11
jul-
11
ou
t-1
1
jan
-12
abr-
12
jul-
12
ou
t-1
2
Delinquency (LHS) Household Debt Services Ratio (RHS)
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Investments’ Leading Indicator Capital goods production, investments (YoY %)
Investments are volatile and pro-cyclical. Consumption and investments move together. Credit rebound suggests an investment recovery.
Source(s): ANFAVEA and Votorantim Corretora.
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
19
96
-I
19
96
-IV
19
97
-III
19
98
-II
19
99
-I
19
99
-IV
20
00
-III
20
01
-II
20
02
-I
20
02
-IV
20
03
-III
20
04
-II
20
05
-I
20
05
-IV
20
06
-III
20
07
-II
20
08
-I
20
08
-IV
20
09
-III
20
10
-II
20
11
-I
20
11
-IV
20
12
-III
Investments Capital Goods
Overstaying Fiscal Stimulus Central government spending (% GDP)
Source(s): Central Bank and Votorantim Corretora.
Uncertainties on global and local growth are incentives for sustaining the ongoing spending trend.
8
15,6% 15,7%
15,1%
15,6%
16,4%
17,0% 17,1%
16,4%
17,7% 17,4% 17,5%
18,3%
18,7%
12,0%
13,0%
14,0%
15,0%
16,0%
17,0%
18,0%
19,0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Central Bank: Monetary Incentives Neutral real rates and policy rate
9
Source(s): Central Bank, Bloomberg and Votorantim Corretora.
Policy stance is easy: Selic is running below trend.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
nov-0
1
mai-02
nov-0
2
mai-03
nov-0
3
mai-04
nov-0
4
mai-05
nov-0
5
mai-06
nov-0
6
mai-07
nov-0
7
mai-08
nov-0
8
mai-09
nov-0
9
mai-10
nov-1
0
mai-11
nov-1
1
mai-12
nov-1
2
mai-13
Recovery is on Track GDP (s.a. QoQ %)
Source(s): Central Bank and Votorantim Corretora.
Despite the slow recovery rhythm, short-term conditions are improving.
10
2,0%
1,2%
1,0% 1,0%
0,7%
0,5%
0,1% 0,1% 0,1%
0,2%
0,6%
1,1%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
Inflation Vulnerability Services inflation (IPCA YoY %)
Source(s): IBGE and Votorantim Corretora.
Inflation depends on both tradable and monitored prices to offset services inflation.
11
5,5
7,2
6,7 6,8
5,5 5,2
6,4 6,4
7,6
9,0 8,7
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Monetary Cycle Still There Output and interest rate gaps
12
Source(s): IBGE, Central Bank and Votorantim Corretora.
Interest rates are expected to be lower than the neutral level, in order to stimulate the economy. The Central Bank still reacts to the economic cycle.
0,97
0,98
0,98
0,99
0,99
1,00
1,00
1,01
1,01
1,02
1,02
-5,0%
-4,0%
-3,0%
-2,0%
-1,0%
0,0%
1,0%
2,0%
3,0%
4,0%
20
06
-I
20
06
-III
20
07
-I
20
07
-III
20
08
-I
20
08
-III
20
09
-I
20
09
-III
20
10
-I
20
10
-III
20
11
-I
20
11
-III
20
12
-I
20
12
-III
20
13
-I
20
13
-III
Output Gap (LHS) Interest Rate Gap (RHS)
BRL Converges to Fundamentals Effective real rate index
13
Source(s): IPEA and Votorantim Corretora.
Better fundamentals expected for the 2H13 reinforces the convergence call.
50,0
70,0
90,0
110,0
130,0
150,0
170,0
jan
-80
mai
-81
set-
82
jan
-84
mai
-85
set-
86
jan
-88
mai
-89
set-
90
jan
-92
mai
-93
set-
94
jan
-96
mai
-97
set-
98
jan
-00
mai
-01
set-
02
jan
-04
mai
-05
set-
06
jan
-08
mai
-09
set-
10
jan
-12
Real FX rate trend (HP filter) Linear (trend (HP filter))
Brazilian Outlook
Source(s): Central Bank and Votorantim Corretora.
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2006 2007 2008 2009 2010 2011 2012f 2013f
GDP (USD billion) 1,089 1,366 1,651 1,626 2,139 2,474 2,265 2,421
GDP (Real Growth, %) 4.0 6.1 5.1 -0.2 7.5 2.7 1.0 3.5
Industrial Production (%, year) 2.8 6.0 3.1 -7.4 10.5 0.3 -2.4 3.5
Retail Sales (%, year) 6.2 9.7 9.1 5.9 10.9 6.7 8.6 6.4
Unemployment Rate (%, year average) 10.0 9.3 7.9 8.1 6.7 6.0 5.5 5.2
Real Income (%, year) 4.0 3.2 3.4 3.2 3.8 2.7 4.1 2.8
Credit Volume Growth (%, year) 20.7 27.8 31.1 15.2 20.6 19.0 15.2 16.1
Credit Volume (% GDP) 30.9 35.2 40.5 43.7 45.2 49.1 52.0 54.5
Inflation (IPCA, %) 3.1 4.5 5.9 4.3 5.9 6.5 5.8 5.3
Interest Rate (SELIC year-end, % p.a.) 13.3 11.3 13.8 8.8 10.8 11.0 7.25 8.50
Exchange Rate (year-end, BRL/USD) 2.14 1.77 2.34 1.74 1.67 1.88 2.04 1.95
Trade Balance (USD billion) 46.4 40.0 24.8 25.3 20.3 29.7 21.0 30.0
Current Account (USD billion) 13.6 1.6 -28.2 -24.3 -47.4 -52.6 -49.1 -50.2
Current Account (% GDP) 1.3 0.1 -1.8 -1.5 -2.2 -2.1 -2.2 -2.1
Foreign Direct Investment (USD billion) 18.8 34.6 45.0 25.9 48.4 66.7 68.9 67.0
International Reserves (USD billion) 85.8 180.3 206.8 239.1 288.6 355.1 390.0 410.0
Fiscal Nominal Result (% GDP) -3.6 -2.8 -2.0 -3.3 -2.5 -2.6 -2.2 -2.5
Fiscal Primary Surplus (% GDP) 3.2 3.3 3.4 2.0 2.8 3.1 2.2 2.0
Public Sector Net Debt (% GDP) 51.1 45.7 38.5 42.8 40.2 36.5 34.5 34.6
This report has been prepared by Votorantim Corretora de Títulos e Valores Mobiliários Ltda. (the “Firm”), a subsidiary of Banco Votorantim S.A., and distributed in the United States pursuant to SEC Rule 15a-6 and related interpretations issued by the U.S. Securities and Exchange Commission by Banco Votorantim Securities, Inc., a U.S. registered broker-dealer and affiliate of the Firm. The information presented herein is merely informative, and therefore does not constitute any commitment and/or business recommendation. Hence, we emphasize that all consequences and liabilities for the use of any data or analysis contained in this report are at the user’s sole risk, exempting the Firm and its affiliates from any liability derived from the use of this material. This report contains privileged and confidential information and is intended solely for the designated addressee. Therefore any disclosure, copying, distribution or any action taken in reliance on it, is prohibited and unlawful. Client Service Center: 0800 728 0083, Hearing and Speech Impaired: 0800 701 8661. Available every day, 24 hours a day, or by e-mail at [email protected]. Ombudsman Office: 0800 707 0083, Hearing and Speech Impaired: 0800 701 8661, Monday through Friday from 9:00 am to 6:00 pm (Brasília time).
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