Transcript Slide 1
Brazil: Recent Economic Developments Afonso Bevilaqua / Alexandre Schwartsman June 2004 1 I. Economic Activity II. Inflation III. External Sector IV. Fiscal Policy and Debt Management V. Strengthening Resistance to Shocks 2 I. Economic Activity 3 GDP Growth Seasonally Adjusted 1.6 1.4 % 0.5 1Q03 2Q03 2Q03 2Q03 1Q04 -0.9 -1.2 4 GDP Growth Seasonally adjusted GDP Agriculture Industry Mineral Manufacturing Construction Utilities Services Commerce Transport Communication Government Financial Rents Other Consumption Government Investment Exports Imports 1Q03 2Q03 3Q03 4Q03 1Q04 vs 1Q03 1Q04 Last 4 quarters -1.2% 2.9% -2.7% -0.9% 1.0% -3.7% 0.5% -4.6% 3.0% 1.4% 5.6% 1.8% 1.6% 3.3% 1.6% 2.7% 6.4% 2.9% 0.0% 4.0% -1.0% - - - - - -3.9% 6.0% -2.3% 1.3% 0.7% 1.2% -8.9% 0.3% -0.6% -0.1% 0.2% 0.8% 0.4% 1.2% 0.1% - - - - - 5.1% 7.4% -1.9% 1.1% 1.9% 1.1% -2.1% -1.4% 1.8% -0.9% 0.7% 0.8% 1.1% -1.0% -1.6% 0.4% -5.1% -3.1% 3.1% -1.2% 0.3% -7.1% 6.2% -1.9% 0.5% 0.0% 3.2% 0.8% 0.7% 1.5% 0.2% 4.0% 5.7% 8.2% 0.3% 0.8% 2.3% 5.6% 4.0% 1.2% 1.5% 2.2% 19.3% 11.7% -2.3% 1.0% -5.7% 14.6% 2.1% 5 GDP After FX Crises Brazil (2004) -0.2% -4.9% -6.2% -6.7% -7.4% -10.5% 3.5% Brazil (2003) Russia (1998) Mexico (1995) Korea (1998) Malaysia (1998) Thailand (1998) -10.8% Uruguay (2002) -11.0% Argentina (2002) -13.3% Source: IMF, Brazil 2004: Central Bank estimate Indonesia (1998) 6 Real Retail Sales Seasonally Adjusted, 3-Month Moving Average Average 2003 = 100 107 105 103 101 99 97 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Mar 04 7 Retail Sales % Mar 2004 Mar 2003 1Q2004 1Q2003 +6.71 +6.29 Furniture & Electronics +24.75 +21.75 Fuel and Lubricants +8.26 +5.87 Supermarket, Food, Beverage and Tobacco +3.55 +3.18 Vehicles & Autoparts +12.56 +9.87 Clothing +2.36 -0.20 Total 8 Retail Sales % Accumulated growth since June 2003, seasonally adjusted 22 20 18 16 14 12 10 8 6 4 2 0 -2 Furniture & Electronics Vehicles & Autoparts Clothing Supermarket Jun 03 Jul 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 9 Credit x Demand 106 1.90 105 103 1.80 102 1.75 101 Credit to Individuals right scale 100 R$ billion 2003 = 100 1.85 Retail Sales left scale 104 1.70 99 98 1.65 Jun 03 Jul 03 Source: Bacen Aug Sep 03 03 Oct 03 Nov Dec 03 03 Jan Feb 04 04 Mar 04 Apr 04 10 Total Credit 110 Jun 2003 = 100 108 106 104 102 100 98 Jun 03 Jul 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 Apr 04 11 Lending Interest Rates 90 41 86 Corporates %p.a. 82 38 right scale 78 35 74 Individuals left scale 70 32 66 62 29 Jan 03 Mar 03 Source: Bacen May 03 Jul 03 Sep 03 Nov 03 Jan 04 Apr 04 12 Real Interest Rates (360-day swap) 40 32 % p.a. Avg 04 9.9% 24 Avg 97/99 21.4% Avg 01/02 17.6% 16 Avg 03 13.2% Avg 00 12.3% 8 Jan 97 Jan 98 Source: Bacen Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 13 Industrial Sales x Industrial Output 120 Industrial Sales Jun 03 = 100 115 110 105 Industrial Output 100 Jun 03 Jul 03 Source: IBGE, CNI Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 14 Quarterly Industrial Survey: Level of Inventories Insufficient Excessive Balance 10 % of Sample 5 0 -5 -10 -15 -20 Apr 03 Source: FGV Jul 03 Oct 03 Jan 04 Apr 04 15 Real Industrial Sales 120 s.a., Jun 2003 = 100 115 110 105 100 95 Jun 03 Source: CNI Jul 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 16 Industrial Output 110 s.a., Jun 2003 = 100 108 106 104 102 100 98 Jun 03 Source: IBGE Jul 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 17 Industrial Output % Total Capital Goods Intermediate Goods Consumer Goods Durable Semi-Durable e Non-Durable Source: IBGE Mar 04 Mar 03 1Q04 1Q03 +11.9 +5.8 +36.5 +20.9 +6.8 +4.5 +13.7 +4.6 +43.9 +20.5 +7.4 +1.1 18 Industrial Output (1994-2004) 110 s.a., 2002 = 100 105 100 95 90 85 80 Jan 94 Apr 95 Jul 96 Sources: IBGE, Bacen Oct 97 Jan 99 Apr 00 Jul 01 Oct 02 Mar 04 19 Formal Employment 104 s.a., Jun 2003 = 100 103 102 101 100 99 Jun 03 Jul 03 Aug 03 Sep 03 Oct 03 Nov Dec 03 03 Source: Ministry of Labor and Employment Jan 04 Feb 04 Mar 04 Apr 04 20 Industrial Employment São Paulo (Fiesp) 101,5 Brazil (CNI) s.a., Jun 2003 = 100 101,0 100,5 100,0 99,5 Jun 03 Jul 03 Ago 03 Sep 03 Oct 03 Nov Dec 03 03 Jan 04 Feb 04 Mar Apr 04 04 21 Industrial Real Wages 107 Mar 04 / Jun 03 = 6.9% Mar 04 / Mar 03 = 8.8% s.a., Jun 2003 = 100 106 105 104 103 102 101 100 99 98 Jun 03 Source: CNI Jul 03 Ago 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04 22 Urban Average Real Earnings 108 106 Mar 2002 = 100 104 102 100 98 96 94 92 90 88 86 Mar 02 Source: IBGE Aug 02 Jan 03 Jun 03 Nov 03 Apr 04 23 Steel Output s.a., Jun 2003 = 100 103 100 97 94 91 Jun 03 Source: IBS Jul 03 Aug 03 Sep 03 Oct 03 Nov Dec 03 03 Jan 04 Feb 04 Mar 04 Apr 04 24 Power Consumption: São Paulo 113 s.a., Jun 2003 = 100 110 107 104 101 98 Jun 03 Jul 03 Source: Eletrobrás Aug Sep 03 03 Oct 03 Nov Dec Jan 03 03 04 Feb 04 Mar 04 Apr 04 25 Packing Paper Shipments s.a., Jun 2003 = 100 114 110 106 102 98 Jun 03 Source: ABPO Jul 03 Aug Sep 03 03 Oct 03 Nov Dec 03 03 Jan 04 Feb 04 Mar 04 Apr 04 26 Business Confidence 70 60 Net Expectations 50 Future Conditions 40 30 20 10 0 -10 -20 Current Conditions -30 -40 Jan 02 Apr 02 Jul 02 Oct 02 Source: FGV Industrial Survey Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 27 In a Nutshell • Economic activity recovered since 3Q03, but: – Recovery is not symmetric and does not occur at the same pace in all sectors. – Sales outpaced production growth, affecting level of inventories. – Industrial output growth led by durable and capital goods. – Industrial employment and payroll have reacted since 4Q03. – Positive leading indicators for 2Q04. 28 II. Inflation 29 IPCA Inflation Rate 3.5 3.0 2.5 % 2.0 1.5 1.0 0.5 0.0 -0.5 Jan 02 Apr 02 Jul 02 Oct Jan 02 03 IPCA-15 Apr Jul 03 03 IPCA Oct 03 Jan 04 May 04 30 Wholesale Industrial Prices 2.29 2.5 % 2.0 1.66 1.5 1.0 0.5 0.0 IPA - IPA 10 M Dec 03 IPA - IPA DI 10 IPA - IPA M DI Jan 04 IPA - IPA - IPA 10 M DI Feb 04 IPA - IPA - IPA - IPA - IPA - IPA 10 M DI 10 M DI Mar 04 Apr 04 IPA - IPA 10 M May 04 31 Wholesale Industrial Prices x Consumer Industrial Prices 7 Wholesale industrial prices 6 5 4 % 3 2 1 0 Retail Industrial prices -1 -2 Jan 96 Jul 97 Jan 99 Jul 00 Jan 02 Jul 03 Apr 04 32 Commodities Prices Chicago Commodities Bureau (CRB) Price Index 110 100 1995 = 100 Food 90 80 70 Metals 60 Jan 02 Aug 02 Mar 03 Oct 03 Apr 04 33 Core Inflation IPCA: 3-Month Moving Average 1.8 1.6 1.4 % 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jan 01 Jul 01 Jan 02 Smoothed trimmed means Jul 02 Exclusion Jan 03 Jul 03 Apr 04 Non-Smoothed trimmed means 34 Tradable x Non-Tradable Inflation IPCA: 3-Month Moving Average 3.5 3.0 2.5 % 2.0 1.5 1.0 0.5 0.0 -0.5 Jan 00 Jul 00 Jan 01 Jul 01 Tradables Jan 02 Jul 02 Jan 03 Jul 03 Apr 04 Non-Tradables 35 Inflation: (% of Items with Price Increases) 90 % 80 Apr 04 65.2 70 60 50 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 36 Market Inflation Expectations: 2004 8.0 7.0 6.5% % p.a. 6.0 5.0 4.0 3.0 Jan 02 May 02 Sep 02 Jan 03 May 03 Sep 03 Jan 04 May 04 37 Quarterly Inflation Expectations: 2004 1.9 % 1.7 1.5 1.3 1.1 Dec 03 Jan 04 1T2004 Feb 04 2T2004 Mar 04 Apr 04 3T2004 May 04 4T2004 38 Inflation Expectations: 12-Month 14 13 12 11 10 9 8 7 6.0% 6 5 Jan 03 Mar 03 May 03 Jul 03 Sep 03 Nov 03 Jan 04 Mar 04 May 04 39 12-Month Inflation 19 16 % 13 Apr 04 5.3% 10 7 4 Jan 01 Jan 02 Jan 03 Actual Jan 04 Jan 05 Market Expectation 40 III. External Sector 41 Current Account vs. Trade Balance 6,000 28,000 24,000 0 -6,000 16,000 -12,000 12,000 -18,000 8,000 4,000 -24,000 Trade balance Current account 20,000 0 -30,000 -36,000 Jan 96 -4,000 -8,000 Dec 96 Nov 97 Oct 98 Sep 99 Aug 00 Jul 01 Jun 02 May Apr 03 04 42 Current Account Surplus: 1994/2004 2 0.8 1 1.1 % of GDP 0 -1 -0.3 -2 -3 -4 -5 - 4.7 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* *2004: 12-month to April 43 Quarterly Trade Balance 7.5 Exports 7.0 US$ billion 6.5 6.0 5.5 5.0 Imports 4.5 4.0 3.5 1996 1997 1998 1999 2000 2001 2002 2003 2004 44 Exports and Imports Quantum Seasonally Adjusted 215.8 220 Exports 200 1996 = 100 180 160 140 Imports 120 107.4 100 80 60 1996 1997 1998 1999 2000 2001 2002 2003 2004 45 Export and Import Prices 110 1996 = 100 105 100 95 Imports 92.7 90 86.3 85 80 75 1996 Exports 1997 1998 1999 2000 2001 2002 2003 2004 46 Exports Jan-Apr 2004 Quantitites Prices Cross-effect US$ mn US$ mn % US$ mn % US$ mn % Exports 5 283 3 430 65% 1 701 32% 209 4% Primary 1 945 612 31% 1 206 62% 128 7% 556 309 56% 225 41% 22 4% 2 837 2 509 88% 269 9% 59 2% Semimanufactures Manufactures Jan-Dec 2003 US$ mn Quantitites Prices Cross-effect US$ mn % US$ mn % US$ mn % Exports 12 722 9 975 78% 2 594 20% 291 2% Primary 4 226 2 222 53% 1 772 42% 233 6% Semimanufactures 1 979 870 44% 1 011 51% 98 5% Manufactures 6 655 6 883 103% - 189 -3% - 39 -1% 47 Imports Substitution Imported Quantum left scale Dec 1995 = 100 132 116 128 114 124 112 120 110 116 108 112 106 108 104 104 102 Industrial Output right scale 100 100 96 98 92 96 Dec 95 Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 48 Export Growth Remains Diversified Exports by Product Jan- Apr 2004 Product group 12-month Absolute change USD million Share % change Product group Absolute change USD million Share 1.027 685 664 546 502 308 301 19% 13% 13% 10% 9% 6% 6% 35% 32% 36% 47% 47% 22% 26% Transport equipment Soy Metal Mechanical Meats Chemicals Paper & pump Wood Sugar Shoes & Leather 223 4% 37% 211 167 4% 3% 53% 19% Ore Textiles Wood Other 648 12% 9% 5.282 100% 25% Transport equipment Metal Soy Meats Mechanical Chemicals Ore Total % change 2.287 1.925 1.618 1.321 1.287 1.012 547 17% 14% 12% 10% 9% 7% 4% 24% 28% 25% 44% 38% 25% 23% 545 475 435 4% 3% 3% 16% 37% 23% Other 2.328 17% 10% Total 13.781 100% 21% 49 Export Growth Remains Diversified Exports by Country Jan- Apr 2004 Market 12-month Absolute change % USD million Share change Market Absolute change % USD million Share change Argentina 902 17% 82% Argentina 2.617 19% 92% China 382 7% 32% China 1.623 12% 49% Netherlands 324 6% 29% Netherlands 1.129 8% 33% Italy 268 5% 41% Germany 602 4% 22% Germany 260 5% 28% Italy 531 4% 27% Venezuela 249 5% 221% Korea 476 3% 53% France 186 4% 38% Spain 461 3% 36% Spain 175 3% 43% Mexico 431 3% 17% Mexico 160 3% 21% Chile 407 3% 25% South Korea 157 3% 53% United States 400 3% 3% Other 2.219 42% 16% Other 5.103 37% 18% Total 5.282 100% 25% Total 13.781 100% 21% 50 Foreign Direct Investment 35 US$ billion 30 25 20 15 10 2004* 2003 2002 2001 2000 1999 1998 1997 1996 0 1995 5 FDI Inflows Related to Privatizations *2004: BCB estimate 51 IV. Fiscal Policy and Debt Management 52 Consolidated Public Sector Primary Surplus 6 5 Apr 04 4.23 % of GDP 4 3 2 1 0 -1 -2 Jul 94 Feb 96 Sep 97 Apr 99 Nov 00 Jun 02 Jan 04 53 Fiscal Result Jan-Apr 1998 1999 2000 2001 2002 2003 2003 I - NATIONAL TREASURY Revenues Transfers Net revenues Expenditures 2004 change 1.5% 15.1% 3.0% 12.1% 10.3% 3.2% 16.6% 3.5% 13.2% 9.7% 2.9% 16.4% 3.7% 12.8% 9.6% 3.0% 17.5% 3.8% 13.6% 10.3% 3.7% 18.6% 4.2% 14.5% 10.6% 4.4% 18.3% 4.0% 14.3% 9.5% 6.62% 20.42% 4.52% 15.90% 9.17% 5.0% 0.5% 5.1% 0.6% 5.1% 0.5% 5.4% 0.6% 5.4% 0.6% 4.8% 4.0% 4.0% 4.4% 4.6% 5.2% 0.6% 0.3% 3.5% 5.30% 0.42% 0.27% 3.19% 5.23% 0.48% 0.46% 3.62% Subsidies II - INSS Revenues Benefits III - CENTRAL BANK 0.3% -0.8% 5.1% 5.9% 0.0% 0.3% -1.0% 5.0% 6.0% -0.1% 0.3% -0.9% 5.1% 6.0% 0.0% 0.4% -1.1% 5.2% 6.3% -0.1% 0.2% -1.3% 5.3% 6.5% -0.1% 0.4% -1.7% 5.3% 7.1% 0.0% 0.10% -1.27% 4.95% 6.22% -0.04% 0.19% 0.09% -1.65% -0.38% 5.34% 0.39% 6.99% 0.77% -0.04% 0.00% Central Government Primary Result 0.7% 2.2% 1.9% 1.8% 2.4% 2.6% 5.31% 4.92% -0.39% Payroll Unemployment benefits LOAS/RMV OCC 6.61% -0.01% 20.91% 0.49% 4.32% -0.21% 16.60% 0.70% 9.80% 0.62% -0.07% 0.06% 0.20% 0.43% Memo: Total Revenues Transfers Primary expenditures 20.2% 21.7% 21.5% 22.7% 23.9% 23.6% 25.37% 26.25% 0.88% 3.0% 3.5% 3.7% 3.8% 4.2% 4.0% 4.52% 4.32% -0.21% 16.5% 16.0% 15.9% 17.0% 17.4% 17.1% 15.54% 17.02% 1.48% 54 Fiscal Result Jan-Apr 1998 1999 2000 2001 2002 2003 2003* 2004* change Nominal deficit 7.5% 4.0% 1.7% -2.2% Primary deficit 0.01% -3.19% -3.46% -3.64% -3.89% -4.37% -7.0% -6.4% 0.6% 5.8% 3.6% 3.6% 4.6% 5.2% Central Government -0.5% -2.3% -1.9% -1.8% -2.4% -2.6% -5.4% -5.0% 0.4% Subnational governments 0.2% -0.2% -0.5% -0.9% -0.8% -0.9% -1.3% -1.3% 0.0% States 0.3% -0.2% -0.4% -0.6% -0.6% -0.8% -1.2% -1.2% 0.0% Municipalities -0.1% -0.1% -0.1% -0.3% -0.2% -0.1% -0.1% -0.1% 0.0% 0.4% -0.6% -1.1% -0.9% -0.7% -0.9% -0.3% -0.1% 0.3% Federal 0.2% -0.7% -0.9% -0.6% -0.5% -0.6% -0.1% 0.2% 0.3% Local 0.1% 0.0% -0.1% -0.3% -0.3% -0.3% -0.3% -0.3% 0.0% Nominal Interest on Debt 7.5% 9.0% 7.1% 7.2% 8.5% 9.6% Public companies 11.0% 8.1% -2.9% 55 Public Sector Primary Surplus 5 % of GDP 4 3 2 1 0 -1 Dec 98 Aug 99 Apr 00 Dec 00 Aug 01 Federal Government and Bacen State-Owned Enterprises Apr 02 Dec 02 Aug 03 Apr 04 Sub-national Governments Consolidated Public Sector 56 Debt-to-GDP Ratio 63 % do PIB 54 45 Jan 02 May 02 Sep 02 Jan 03 May 03 Set 03 Apr 04 Apr 04 56.6% 36 27 Jan 91 Apr 92 Jul 93 Oct 94 Jan 96 Apr 97 Jul 98 Oct 99 Jan 01 Apr 02 Jul 03 57 Debt Dynamics 1999 Net debt increase 7.4% 1. Primary surplus -3.0% 2. Pure interest on the debt 8.4% 3. Depreciation on domestic debt 3.8% 4. Depreciation on foreign debt 4.2% 5. Skeletons 0.0% 6. Privatization proceeds -0.9% 7. Effect of GDP growth -5.2% Memo: Debt dynamics (1+2+7) Currency (3+4) Net "skeletons" (5-6) 2000 2001 2002 2003 2004 -0.2% 3.2% 2.8% 3.2% -2.1% -3.3% -3.5% -3.3% -4.3% -2.0% 6.8% 6.9% 7.2% 9.3% 2.5% 0.8% 1.5% 4.8% -1.5% 0.1% 0.8% 1.5% 4.4% -1.6% 0.2% 0.8% 1.5% 0.9% 0.0% 0.0% -1.8% -0.1% -0.2% 0.0% 0.0% -4.3% -4.6% -11.0% 1.2% -2.9% 0.2% -0.8% -1.2% 8.0% 1.6% 3.0% -0.9% -1.0% 1.4% -7.1% 6.3% -2.4% 9.3% -3.1% 0.3% 0.7% 0.0% 0.0% 58 FX-Linked Debt Rollover Rate 100 90 80 % 70 60 50 40 30 20 10 0 0% 0% 0% 0% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 03 03 03 03 03 03 03 03 03 03 03 03 04 04 04 04 04 59 USD Debt - % of debt 65 56 55 Total USD-linked debt vs total net debt % 45 35 31 25 Domestic USD-linked debt vs. domestic debt 15 16 5 Jan 97 Mar 98 May 99 Jul 00 Sep 01 Nov 02 Apr 04 60 USD Linked Public Debt 136.0 140 US$ billion 120 100 Apr/04 97.3 80 60 40 Jan 97 Sep 98 May 00 Jan 02 Sep 03 61 V. Strengthening Resistance to Shocks 62 Net International Reserves 35 US$ billion 30 Net Reserves 25 20 15 Adjusted Net Reserves 10 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 63 External Debt Ratios 96 97 98 99 00 01 02 03 04* Interest payments/exports (%) 26.7 27.2 31.0 36.4 31.0 30.3 25.3 21.0 19.9 Net external debt/exports 2.0 Net external debt/GDP (%) 12.1 15.2 20.9 32.5 28.4 31.9 35.9 30.6 26.0 *2004: BCB estimate 2.3 3.2 3.6 3.1 2.8 2.7 2.1 1.8 64 Interest Payments/Exports Ratio 38 34 % 30 26 22 18 1996 1997 *2004: BCB estimate 1998 1999 2000 2001 2002 2003 2004* 65 Net External Debt/Exports Ratio 4.0 3.5 % 3.0 2.5 2.0 1.5 1996 1997 *2004: BCB estimate 1998 1999 2000 2001 2002 2003 2004* 66 Net External Debt/GDP Ratio 40 35 % 30 25 20 15 10 1996 1997 *2004: BCB estimate 1998 1999 2000 2001 2002 2003 2004* 67 Impact of a 1% FX change on Debt/GDP ratio 0,35 0,33 0,31 % 0,29 0,27 0,25 0,23 0,21 0,19 0,17 Jan 00 Sep 00 May 01 Jan 02 Sep 02 May 03 Apr 04 68 Brazil: Recent Economic Developments Afonso Bevilaqua / Alexandre Schwartsman June 2004 69