MUMBAI, May 30, 2014

Brazil is one of the most promising emerging markets in the world. A high degree of diversification in its product exportation base, a diversified list of trading partners, internal economic stability, increasingly large work force and good social standards are helping to attract more and more global investors. In addition to this, the forthcoming 2014 Soccer World Cup and 2016 Olympics are generating a large number of infrastructure investment opportunities.

Brazil is in the top-ten of world economies, sporting a vibrant agricultural industry that continues to grow. The country has awakened the attention of the world by creating a healthy and productive business environment. In 2008, when global markets were shaken by the economic crisis, Brazil was one of the least affected. This demonstrates Brazil’s stable and balanced economy supported by a strong and consistent economic policy sustained by a vibrant and stable democracy.

According to World Bank data, Brazil accounts for more than half of the South American economy, and is responsible for more than 2% of the world’s GDP. Brazil is one of the most promising and diversified business markets in the world. With a population of about 191m people, its consumer market is large and has potential for high growth, since in the past few years millions of people have reached the middle classes.

Development of the industrial sector is in line with a new economic reality that puts Brazil on the foreign investment map. Some of the highlights of Brazil’s economic development are:

• 7th largest GDP: US$ 2,253 billion (2012)

• 5th largest GDP:US$ 3189 billion by 2017

• 5th largest population: 199 million people (2012)

• 4th largest FDI destination in the World

• IMF Projected Growth Rate at 6% for Next 6 Years

• World’s largest producer of bio-ethanol

• World’s largest producer of iron ore

• World’s largest exporter of Coffee, Soya, Meat, Chicken, Leather, Sugarcane & Fruit juices

• Recent discoveries could catapult Brazil into one of the largest oil producers in the world

• Gateway to South American Markets

The hosting of FIFA World Cup in 2014 and Olympics provide an opportunity for Brazil to overcome the bottleneck in physical and human capital infrastructure which is holding up development. Many investors believe that attractiveness will improve over the next three years and perceive Brazil will be a leader in the energy sector by 2020 with substantially improved infrastructure, and they expect improvement in the education system to bridge the skills gap and develop innovation capacity.

This guide would assist potential investors & trading community to understand the characteristics of the Brazilian market, optimising business opportunities.

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Economic Highlights & Forecast

The Brazilian economy has changed substantially over the last ten years. From 2003 to 2012, real GDP increased by 41 percent, real total wages by 65 percent and domestic retail sales by 119 percent. It was a period of consolidation for the domestic market, based on income growth and social inclusion. The country is currently among the biggest markets in the world. In the last decade, investments grew by 71 percent, above GDP growth rates, but they should increase even further in order to become the new engine of economic development.

Already the 7th largest economy (nominal GDP), Brazil is expected to rise to the 5th largest within the next decade. The US Department of State estimates that Brazil’s economy grew in 2010 by 7.5%. In the current financial crisis, Brazil remained mostly resilient and currently possesses over US$ 328 Billion in foreign reserves and has established a firm financial system.

Brazilian economy has been undergoing a continuous growth and development from 2004 on which has led to a rise in employment and real wages. The present GDP is $1.6 trillion and the real growth rate of GDP is 3.7%. rate of unemployment is 9.6% and inflation is 3%. It is a market with huge potential and very high probability of positive return on investment. Brazil experienced a 6% drop in their unemployment rate in the past decade leaving them with only 7% unemployment. These internal successes have opened the door for millions of Agriculture was deregulated in 1990, allowed to consolidate and gain access to foreign machines, fertiliser and pesticides. A few years later, financial services enjoyed far-reaching institutional reforms to boost the supply of credit and bolster capital markets. Both were left in peace-and became roughly 4% more efficient each year in the decade that followed.

Exchange Rates

The Brazilian currency (the real) has appreciated steadily in recent years, initially to a rate of close to 1.50 real to the dollar. With the deepening crisis in Europe, the real developed more volatility and saw multiple small devaluations. In 2011, the nominal exchange rate surpassed 1.90 real per dollar. Exchange-rate policy during the year 2012 was directed toward consolidating a higher exchange rate of around 2.00 real to the dollar. The currency depreciated gradually alongside the fall in the base rate after August 2011. Until the end of 2012, the dollar exchange rate fluctuated between 2.00 and 2.09 real. BTI 2014. The real dropped 1 percent to 2.2442 per U.S. dollar on 5 May 2014, the lowest level on a closing basis since April 3. The currency posted the biggest decline among 16 major currencies tracked by Bloomberg.

Rising Sectors of Brazil’s Economy

Life Sciences: The Life and Sciences Sector has proven to be a very important and successful industry for Brazil. There are more than 1,000 companies dedicated solely to life science research thus making Brazil the strongest Latin American country in this industry. From the 2003 to 2009 time period, 51 FDI projects were created that totaled a worth of US $1.5 billion.

Oil and Gas: The Oil and Gas Industry has always been a cornerstone towards the Brazilian economy, 11% of Brazil’s GDP, and this trend is expected to grow. It is predicted that by 2020 the Oil and Gas Industry will reach US$ 320 billion by the 2020 benchmark. It is well known throughout the sector that there is still a vast and unexplored potential of resources waiting to be tapped.

Tourism: With its tropical landscape and world renowned beaches it is not surprising that Brazil is extraordinarily strong in the Tourism business. Also, it is not surprising that such prestigious sporting events as the Olympics (2016) and the FIFA World Cup (2014) have chosen the beautiful Brazil for their future locations. As of now Brazil averages around 5 million tourists a year and a 4.5% growth rate is expected in this sector.

IT/BPO: IT/BPO is a rising and thriving sector and Brazil is already an established player in the industry. Brazil already holds the 8th largest internal market of IT/BPO and has pumped US$ 59.1 billion into the economy. Furthermore, growth for the sector looks extremely promising as Brazil has no restrictions on foreign investment in the IT/BPO industry and the revenue that does come from IT services, 73% is correlated to development.

Venture Capital: It is clear that Brazil has a strong entrepreneurial spirit and is among seven nations with more than 200 business incubators, 3,000 companies, and more than 15 million entrepreneurs. Therefore the venture capital sector is well established and strong. In 2008, the amount of committed capital to the sector was US$ 27.1 billion which constituents a 438% growth rate when compared to 2000 statistics.

Wireless: Brazil’s Wireless industry is increasingly strong and gaining more of a reputation as a top sector. Over the past 12 months (2011) Brazil has subscribed 10.5 million 3G customers. Yet this amount is only 10.6% of the total mobile connection in Brazil and therefore it is clear that tremendous growth is in the horizon.