Investment Climate In Brazil

Presentation by Anand NagarajCiti Commercial Bank - Middle East Product and Marketing Head

10 Aspects About Brazil’s Current Investment Climate

1)

• 40 million people moved up on the social scale, 55% in Middle Class

• On top of the pyramid is 160,000 millionaires – 11th biggest country in this respect

• Mix of economical/political stability over last 20 years

Strengthening of Social Programs to Reduce Inequality,Large Consuming Middle Class

Unemployment Rate Real Wages

1150.00

1250.00

1350.00

1450.00

1550.00

1650.00

1750.00

1850.00

Mar

-02

Aug-

02Ja

n-03

Jun-

03No

v-03

Apr-0

4Se

p-04

Feb-

05Ju

l-05

Dec-

05M

ay-0

6Oc

t-06

Mar

-07

Aug-

07Ja

n-08

Jun-

08No

v-08

Apr-0

9Se

p-09

Feb-

10Ju

l-10

Dec-

10M

ay-1

1Oc

t-11

Mar

-12

Aug-

12

16500.0

18000.0

19500.0

21000.0

22500.0

24000.0

Real Wages (LHA; s.a.) Employment (RHA; s.a)

4.05.06.07.08.09.0

10.011.012.013.014.0

Ma

r-0

2

Ma

r-0

3

Ma

r-0

4

Ma

r-0

5

Ma

r-0

6

Ma

r-0

7

Ma

r-0

8

Ma

r-0

9

Ma

r-1

0

Ma

r-11

Ma

r-1

2

Unemployment Rate Unemployment Rate (s.a)

Source: IBGE and Citi Source: IBGE and Citi

2)

• GDP reached USD 2.2 trillion in 2012

• Constitutes 42% of Latin America’s GDP

7th Strongest Economy in the World (by GDP), and 1st in Latin America

GDP Growth

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2008.I

2008.II

2008.III

2008.IV

2009.I

2009.II

2009.III

2009.IV

2010.I

2010.II

2010.III

2010.IV

2011.I

2011.II

2011.III

2011.IV

2012.I

2012.II

2012.III

2012.IV

2013.I

2013.II

2013.III

2013.IV

QoQ GDP Growth

Source: IBGE and Citi

3)

• Stable inflation since second half of the 90’s and decrease of local interest rate

• Brazilian reserves USD 36bn in 1999, USD 379bn in 2012

• “Investment Grade” rating after the global financial crisis in 2008

Brazil Has Become a Stable Business Environment

Real Interest RatesConsumer Inflation Index (IPCA)

1.490

2

4

6

8

10

12

14

Oct-03

Oct-04

Oct-05

Oct-06

Oct-07

Oct-08

Oct-09

Oct-10

Oct-11

Oct-12

0.0

2.04.0

6.0

8.0

10.012.0

14.016.018.0

20.0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-11

Jan-1

2

Jan-1

3

Jan-1

4

in %

Source: CitiSource: Bloomberg and Citi

4)

Wide and Diverse Production Matrix

Manufacturing; 14.00%

Professional Services / Health / Education;

16.30%

Trade; 12.70%

Real Estate; 7.90%Financial Intermediation; 7.40%

Construction; 5.80%

Farming; 5.50%

Others; 30.00%

5)

• 15th position globally for oil production – 13.9bn barrels in 2012

• Leverage towards self-sufficiency

Brazil Occupies Relevant Global Position in Oil Production

6)

• Capable of supporting global expansion of Brazilian companies

• Bovespa (Brazil’s main Stock Exchange) was 3rd biggest in the world in 2012 – USD 13tr

on negotiated volumes

• 466 companies listed on the stock exchange – 23rd ranking globally in this criteria

• Total CAP of the stocks traded in Brazil are the 7th biggest in the world

Sophisticated and Efficient Financial Market Structure

0.00

1,000.00

2,000.00

3,000.00

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13

in BRLbn

Equity Market Capitalization

Source: BM&F Bovespa

7)

• FDI increased from USD 32.8bn in 2000 to USD 66.6bn in 2011

Foreign Direct Invsestment More Than Doubled in the Last 12 Years

2%

22%

52%

0%

21%

2%1%

Asia Middle EastEurope North AmericaOceania Central & South AmericaAfrica

0%

20%

40%

60%

80%

100%

June 2010 Dec 2010 June 2011 Dec 2011 June 2012

Asia & Oceania Europe Americas Middle East & Africa

Foreign Investors - (Participation by Region)

8)

• Volumes of exports grown from USD 96.7bn in 2004 to USD 256bn in 2011

• Main export products: Iron ores and concentrates (15%), Petroleum oils, crude (8%), Raw

sugar, cane (6%), Soya beans (5%), Poultry (3%)

• Major Export Partners: China (15%), United States (10%), Argentina (9%), Netherlands

(4%), Germany (4%)

• Imports grown from USD 62.8bn in 2004 to USD 226.2bn in 2011

• Main import products: Cars (6%), Petroleum oils, refined (5%), Parts and accessories of

the motor vehicles (4%), Electronic integrated circuits (3%), Medicaments, packaged (2%)

• Major Import Partners: United States (18%), China (16%), Argentina (10%), Germany

(8%), Korea, Rep. (5%)

Exports and Imports More Than Doubled over the Last 7 Years

9)

• 2014: Brazil to host the FIFA World Cup

• 2016: Brazil to host the Summer Olympic Games

• Increase in participation of private capital (both local and foreigner) on infrastructure-

Privatizations and Public and Private Partnerships of certain airports / railways / roads /

ports

Investments on Infrastructure Related to Upcoming Major Sport Events

Source: IBGE and Citi

Private Consumption x Investments

2.6

-2.4

-10

-5

0

5

10

15

20

25

2001.I

2001.IV

2002.III

2003.II

2004.I

2004.IV

2005.III

2006.II

2007.I

2007.IV

2008.III

2009.II

2010.I

2010.IV

2011.III

2012.II

Private Consumption Investment

10)

• Banking with Citi opens capability of differentiating from local comeptitions due to cross-

border capabilities and foreign trade operations

• Citi entered Brazil market 1915 (97 years)

• Citi Brazil in major parts of the territory; present in all major cities

• Headquarters in Sao Paulo

• Full product suite serve companies both locally and internationally:

• Citi Transaction Services (CTS)

• Citi Commercial Bank (CCB)

• Consumer Banking

Citi Brazil a Benchmark on Cross-Border Operations

END