Post-Crisis Development Challenges: perspectives for Brazil and other BRICSs Seminar Innovation, Development and the Global Crisis: BRICSs experience Rio de Janeiro, 16-17 November 2009 Luciano Coutinho
Post-Crisis International Scenario Increasing participation of developing countries in the world economy is expected to remain in the coming years Developing countries with large domestic markets are less affected BRICS: Expressive reserves and greater liquidity Domestic markets with huge potential Participation in international trade A situation never seen before: these countries have contributed to alleviate the crisis and to reveal new development alternatives 2
World GDP Elements World GDP 70 60 62.7 62.1 61.5 60.5 59.6 58.6 57.5 56.3 55.2 54.2 53.2 50 40 37.3 37.9 38.5 39.5 40.4 41.4 42.5 43.7 44.8 45.8 46.8 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* 2010* Source: IMF Emerging and Developing Developed 3
Brazil aced the crisis test Sound financial system operating under effective regulation and ready to expand credit with falling spreads presence of major public banks, Pro-active investment policies with high yields and low risk projects Low leverage in the private sector, with many companies prime to expand Monetary and tax policies with anti-cyclic capacity High level of reserves Low external vulnerability Investment grade 4
Brazil: challenges and opportunities Investments will be driven by four main systems: oil & gas, electric power, logistics and residential construction Domestic market will make the expansion feasible: basic household consumption, housing and durable goods Opportunities for intensive strategies in innovation and social and environmental sustainability The need to resume and qualify long-term planning Promoting and stimulating domestic savings, providing longterm financing sources, developing the capital market Developing the capacity for innovation and competitiveness in the Brazilian production systems: renewable energy sources, health, ICTs 5
GDP is expected to grow 5% p.a. in the 2010-2014 period GPD: Annual Real Variation (%) 6.0 5.0 4.0 3.0 2.8 2.5 5.7 3.2 4.0 5.7 5.1 5.0 2.0 1.0 0.0 Average 1984-93 Average 1994-03 2004 2005 2006 2007 2008 2009 Average * 2010-14 1.0 * 2009 and Avg 2010-14: BNDES' Forecasts. Source: IBGE. Sources: IBGE and BNDES. 6
Countries share of Brazilian exports Brazil has taken an important role in the agenda of developing countries that were less affected by the crisis and are expected to show higher growth levels in the years to come 2002 2008 Developing Countries 38% Developed Countries 62% Developing Countries 52% Developed Countries 48% Source: Ministry of Development, Industry and Trade. Elaborated by: MF/SPE 7
Unemployment rate fell... Unemployment rate down from 10.9% in Sept./04 to 7.7% in Sept./09 Average Unemployment Rate - IBGE 2004 10.90 2005 2006 2007 10.00 9.70 9.00 2008 2009 7.70 7.70 6.80 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Source: IBGE 8
and wages increased REAL WAGES Average for the last 12 months R$ billion 29 28 27 26 27.38 25.65 25 24 23 22 21 24.00 22.70 21,21 20 19 18 Source: IBGE Up to August 09 28.54 28.80 2009 08 Source: IBGE 9 2004 04 2004 08 2004 12 2005 04 2005 08 2005 12 2006 04 2006 08 2006 12 2007 04 2007 08 2007 12 2008 04 2008 08 2008 12 2009 04
Public banks sustained credit after the crisis Credit Growth (Index September 2008 = 100) Contribution to Credit Growth (Sep/08-Sep/09) 140 138.8 135 State-owned banks 132.9 130 125 120 Private banks 118.3 125.2 121.2 115 113.9 110 105 100 100 109.0 102.6 102.9 102.4 103.3 103.2 105.5 95 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Source: Bacen. The BNDES alone was responsible for 37% of the increase in credit from Sep/08 to Sep/09 10
BNDES weight compared to international financing agencies US$ million BNDES IDB IBRD CAF Dec 31, 2008 Dec 31, 2008 Dec 31, 2008 Dec 31, 2008 Total Assets 118,564 72,510 275,420 14,274 Loan Disbursements 49,791 7,149 18,564 5,292 Total Loans 92,422 51,173 105,698 10,184 ROE 21.2% -0.11% 8.0% 7.2% IDB = Inter-American Development Bank IBRD = The International Bank for Reconstruction and Development (World Bank) CAF = Corporación Andina de Fomento 11
BNDES' Disbursements BNDES approvals and disbursements (US$ billion) 80 74,3 70 60 50 Disbursements Approvals 50,6 50,5 66,3 60,2 40 34,1 33,1 30 20 10 10,9 13,1 13,6 12,9 19,3 22,3 23,5 0 2003 2004 2005 2006 2007 2008 2009* * 12 months up to October 2009 12
BNDES priorities Creation of the Office and Committee for local production systems, regional development, innovation and socioenvironmental development CAR-IMA in November 2007 Main Purposes Contribute to incorporating a systemic vision and priority to regional development Bring BNDES operational areas together Propose new policies and instruments 13
Two main axes of BNDES development strategy 1. Support to structuring projects and their surrounding areas, mainly in developing regions, in order to disseminate and foster development, by encouraging: Enhancement of local production and innovation systems and adding value to goods and services locally produced Commitment of large and medium companies to locally-integrated socio-economic, environmental and institutional development 2. Support for state plans that emphasize integrated long term development of marginalized regions of Brazil 14
Mapping and Policy for Local Innovation and Production Systems Commissioned study involving 180 Brazilian researchers - due to January 2010 Main Purposes Consolidate knowledge on identification and mapping of local production and innovation systems in 22 Brazilian states Assess existing support policies and provide means to design and improve policies for these systems in Brazil 15 15
BRICS Perspectives Opportunities to design and implement proper policy models geared towards in-depth, inclusive, cohesive and sustained development and that: put in its center the capacity to create, acquire and use knowledge and innovation foster environmental development mobilizing renewable energies and low-carbon economies integrate national, regional and local development priorities within a long-term perspective recognize and mobilize production and innovation systems taking full advantages of BRICS diversities reinforce developing countries complementarities, cooperation and sinergies 16
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