Brasil: Cenário Macroeconômico

Brasil: Cenário Macroeconômico Maio 2015 Gilson Carvalho Fiat Chrysler Finanças

Indicadores Macroeconômicos Atividade 2010 2011 2012 2013 2014 2015P 2016P PIB (USD bilhões) 2.206 2.614 2.414 2.388 2.345 2.013 1.928 PIB (BRL bilhões) 3.887 4.375 4.713 5.158 5.521 5.897 6.281 PIB (%) 7,6 3,9 1,8 2,7 0,1 (1,4) 0,9 Credito (BRL bilhões) 1.663 2.034 2.369 2.713 3.022 3.347 3.646 Credito (% PIB) 44,1 46,5 50,3 52,6 54,7 56,8 58,1 População (milhões) 196 197 199 201 203 204,2 205,7 PIB per capta (USD) 11.284 13.242 12.118 11.881 11.563 9.858 9.372 Taxa de Desemprego (%) 6,7 6,0 5,5 5,4 4,8 6,4 7,4 Contas Externas 2010 2011 2012 2013 2014 2015P 2016P Balança Comercial (USD bilhões) 20,1 29,8 19,4 2,6 (3,9) 0,7 9,6 Balança em Conta Corrente (USD bilhões) (47,4) (52,5) (54,2) (81,1) (90,9) (82,5) (75,6) Balança em Conta Corrente (% PIB) (2,1) (2,0) (2,2) (3,4) (3,9) (4,1) (3,9) Investimento Estrangeiro Direto (USD bilhões) 48,4 66,7 65,3 64,0 62,5 45,0 50,0 Reservas Internacionais (USD bilhões) 287,9 352,0 378,6 375,8 374,1 365,6 361,5 Dívida Externa Total (USD bilhões) 255,7 298,2 316,8 312,0 347,6 378,2 409,2 Contas Públicas 2010 2011 2012 2013 2014 2015P 2016P Superávit Primário (% PIB) 2,6 2,9 2,2 1,8 (0,6) 0,9 1,8 Meta Superávit Primário (% PIB) 2,2 2,3 2,2 1,9 1,8 1,2 2,0 Câmbio, Juros e Inflação 2010 2011 2012 2013 2014 2015P 2016P Taxa de Juros (Selic - final de período) 10,75 11,00 7,25 10,00 11,75 13,75 12,00 Inflação (IPCA, %) 5,9 6,5 5,8 5,9 6,4 8,4 5,5 BRL/USD (final de período) 1,67 1,88 2,04 2,34 2,66 3,2 3,3 As série de contas externas não consideram a metodologia adotada pelo Bacen a partir de abril 2015. Source: Market Consensus, FCF 2

Cenário Macroeconômico 1. Fraco desempenho do crescimento em meio a um aumento dos desequilíbrios macro econômicos Recessão em 2015 Crescimento abaixo de 1% em 2016 Demanda doméstica fraca Investigação de corrupção da Petrobras Deterioração do mercado de trabalho Diminuição do crescimento de crédito Inflação elevada 2. Desafios fiscais Déficit fiscal elevado Aumento do gasto do governo Riscos para consolidação fiscal (contração econômica; atraso na implementação das medidas fiscais) 3. Cenário político complicado Perda de popularidade da presidente Congresso fragmentado Investigação de corrupção da Petrobras Fatores de risco para rebaixamento do grau de investimento Continuação do fraco desempenho de crescimento Dificuldade na consolidação fiscal Baixa confiança no processo de implementação das medidas de ajuste fiscal Perda de reservas internacionais Pontos a serem monitorados Contas fiscais indicadores de confiança Eficácia congelamento dos gastos do governo Êxito das de medidas fiscais no Legislativo Fatores fundamentais para melhorar o cenário macro Melhoria da credibilidade política Redução dos desequilíbrios macro econômicos Consolidação fiscal Melhor ambiente de investimento 3

Cenário Macroecônomico Nível de Atividade: Brasil apresenta fraco desempenho do crescimento em meio aos desequilíbrios macroeconômicos, com previsão de crescimento abaixo de 1% em 2016, dificuldade de acesso ao crédito, fraca demanda doméstica e deterioração do mercado de trabalho Inflação: Pressão sobre os preços administrados, desvalorização do real e aumento dos impostos apontam para elevada inflação em 2015, acima do teto da meta de 6,5% Juros: Na última reunião o COPOM aumentou a Selic em 0,5% pp e sinalizou que apesar de próximo o fim do ciclo de aperto monetário não será na próxima reunião Câmbio: O real já depreciou em mais de 15% nesse ano com forte volatilidade e bastante sensível às incertezas políticas, apesar disso o BC não prorrogou o programa de swaps. Balança Comercial: A balança comercial permanece fraca e já acumula um déficit de USD 5 bi até abril. IED: A grande diferença das taxas de juros locais e internacionais contribuem para o influxo de capital estrangeiro no país, apesar da instabilidade política e recessão econômica pela qual o país está passando 4

Cenário Macroeconomico Crédito: a pífia performance econômica, a deterioração do mercado de trabalho e os baixos índices de confiança do consumidor e empresário contribuem para a redução do crédito tanto para as empresas quanto para pessoa física Contas Publicas: apesar do comprometimento do governos com a meta fiscal, o país tem desafios adiante, pois precisa superar a contração econômica, a dificuldade em cortas os gastos e a perda das reservas internacionais além da incerteza na aprovação das medidas de ajuste fiscal Politica: o cenário político está ainda mais instável devido a perda de popularidade da presidente, a fragmentação do congresso e a investigação de corrupção da Petrobrás Risco Soberano: o risco de um rebaixamento do grau de investimento é real. As agências de rating estão monitorando a consolidação fiscal, a deterioração dos índices de confiança e o êxito das medidas fiscais no Legislativo A retomada do crescimento em 2016 (e manutenção da classificação de grau de investimento) depende da extensão dos ajustes implementados em 2015. 5

Backup

GDP 7

Activity Level 2014 GDP growth was 0.1% better than forecasted, but already incorporated in the new methodology... The perspective for 2015 is one of the worst regarding GDP. The market already expects -1.4%. The last GDP data was released in March by IBGE according to the new methodology for National Accounts. IBGE also revised the historical series using the new methodology. The most relevant changes occurred between 2011 and 2013, with an upward revision in the growth rates. 7,6% GDP 3,9% GDP 2014 (bn): BRL 5,521 2,7% 1,8% 0,1% 0,9% -1,4% 2010 2011 2012 2013 2014 2015F 2016F Source: IBGE, FCF 1/9 8

Activity Level A bunch of reasons explain Brazilian s low growth Punctual Issues Structural Issues Domestic Issues Global Issues Infrastructure Investments High inflation Low credibility on fiscal policy Reduced predictability Risk of electricity and water rationing Downgrade rating Petrobras Low growth on important markets (Euro Area) China s growth slowdown Risk of Greece leaving Euro Area Low business and consumer confidence Poor infrastructure conditions impact productivity Demography Lost of momentum of labor force Low productivity Reduced Cross Border Trade High raw material import taxes and few commercial agreements with non prime counterparties Fragility of Institutions Poor perception over quality of institutions Negative GDP Growth Potential growth lower than 3,0% Source: Credit Suisse, BofA, FCF 2/9 9

Purchasing Managers Index (PMI) The Markit manufacturing Purchasing Managers Index (PMI) fell from March s 46.2 to 46.0 in April, thus dropping to the lowest level in over four years. As a result, the PMI index is now further below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector. According to Markit, April s figure came on the back of a steeper decrease in output, new business and buying levels. PMI Note: A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction. Source: Latin Focus 3/9 10

Labor Market Deterioration in labor market conditions in 2015 is expected. The growth of occupied population will be compatible with the slight increase in the unemployment rate in next years. Source: BCB, FCF 4/9 11

Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 Unemployment UNEMPLOYMENT INDEX FEAR OF UNEMPLOYMENT INDEX 98,8 74,7 75 73,8 72,2 74,4 74,6 71,6 76,5 73,5 74,7 75,3 74,5 69 71,3 72,5 73 73,6 76,1 77 75 5/9 Source: IBGE & CNI 12

GDP Breakdown Increase of Brazilian GDP s growth depends on a substantial hike in investments rate and on some internal measures (labor reform, tax reform, enhancements on infrastructure) and a better global outlook... Breakdown of GDP value added in 2014 (%) 5,6-14,3% 23,4 11,6% 62,7% 19,8% 71,0 20,3% Agriculture Industry Services Household Consumption Government Consumption Investments Exports Imports...The low level of confidence indexes (business and consumers) led to a investments deceleration in 2014. Source: IBGE, Tendências, FCF 6/9 13

Supply Demand GDP Breakdown On the demand side, the decrease in the investments and the fall in imports explained the lower GDP growth during 2014... 2008 2009 2010 2011 2012 2013 2014 2015F 2016F Household Consumption 6,4% 4,2% 6,4% 4,8% 3,9% 2,9% 0,9% 0,2% 0,1% Government Consumption 2,1% 2,9% 3,9% 2,2% 3,2% 2,2% 1,3% 2,2% 2,0% GDP (%) GDP growth on supply and demand sides (%) Investments 12,7% -1,9% 17,8% 6,6% -0,6% 6,1% -4,4% -4,6% 0,6% Exports 0,4% -9,2% 11,7% 4,8% 0,5% 2,1% -1,1% -1,4% 5,0% Imports 17,0% -7,6% 33,6% 9,4% 0,7% 7,5% -1,0% -9,0% -3,7% Agriculture 5,5% -3,8% 6,8% 5,6% -2,5% 7,9% 0,4% 0,1% 0,9% Industry 3,9% -4,8% 10,4% 4,1% 0,1% 1,8% -1,2% -4,3% 2,3% Services 4,8% 1,9% 5,8% 3,4% 2,4% 2,5% 0,7% -0,7% 1,0% 5,0% -0,2% 7,6% 3,9% 1,8% 2,7% 0,1% -1,4% 0,9%...On the supply side, industry and agriculture reverted the strong increase presented in 2013. Source: IBGE, Tendências, FCF 7/9 14

Investments vs GDP Source: IBGE, FCF 8/9 15

Investments vs GDP Lack of suitable infrastructure is a serious bottleneck to increase growth pace of Brazil. Investment rate of Brazil is recurrently lower than 20%. Infrastructure investments are far below the level of other developed countries and from BRICS. Infrastructure Investments in Brazil (% of GDP) China Japan India Other Developed Countries Middle East & Africa Infrastructure Investments (% of GDP, average 1992-2011) Eastern Europe European Union USA LatAm Brazil Water Energy Airports Ports Railroads Highways Source: BNDES, Credit Suisse 9/9 16

Inflation 17

Inflation CPI began the year upper the limit of 6.5% yoy and should keep pressured along 2015, mainly due to administered prices and food... CPI Evolution (% p.y) 8,4 5,9 6,5 5,8 5,9 6,4 5,5 4,3 4,5 4,5 4,5 4,5 4,5 4,5 4,5 4,5 CPI Target 2009 2010 2011 2012 2013 2014 2015F 2016F besides the inflation will be above the upper target limit in the current year, the government has been taken the measures to bring the inflation closer to the target in 2016. Source: IBGE, FCF 1/ 1 18

Interest Rates & FX 19

Interest Rates At last Central Bank Monetary Policy Committee (COPOM) meeting, Selic was raised in another 50 bp to 13.25% in May 2015 that until now bring a +600 tightening cycle initiated in April 13. Market expects another hike of 50bp to reach 13.75% in the end of 2015. There are few entities in the market that are forecasting a Selic at 14% in the end of this year. Interest Rate - Selic (% p.y.) 13,75 13 12,50 12,25 11 10,00 11,00 12,00 9 8,75 7,25 7 Besides the pressured inflation, it should remain high along the year since the focus of the monetary authority moves to 2016, the monetary policy strategy tends to put less weight on current inflation and more attention on economic growth and fiscal adjustment. Source: BCB, FCF 1/ May, 1 2015 20

FX Since the middle of 2011, BRL entered in a downward trend. From September 2014 until now the deterioration of fiscal accounts, the uncertainty about economic policy to be adopted, the turbulences around political environment and the difficulty on the fiscal adjustment approval led to a sharp deterioration in the flow to Brazil and the exchange rate had depreciated faster. The market expects BRL 3.20 / USD for the end of 2015. Source: BCB, FFB 1/ May, 2 2015 21

FX BRL x USD : Currency behavior in the last years FHC FHC Lula Lula Dilma PSDB x PT 54,28 x 27,04 PSDB x PT 53,06 x 31,01 PT x PSDB 46,44 x 23,19 PT x PSDB 48,61 x 41,64 PT x PSDB 46,91 x 32,61 PT x PSDB 51,6 x 48,4 Source: BCB, TSE, FFB 2/ May, 2 2015 22

External Accounts 23

Trade Balance The first annual deficit since 2000, 2014 posted a trade balance deficit of USD 3.9 bn 50% 40% 30% 20% 10% 0% -10% -20% -30% 32% 44% 46,1 42% 44,7 32% 40,0 32% 30% 27% 25% 33,7 23% 24% 23% 29,8 17% 16% 17% 24,7 25,3 20,3 7% 19,4 3% 0% 9,6-1% -5% -4% -2% -7% 2,6 0,7 (3,9) -16%-18% -23% -26% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F Exports (%) Imports (%) Trade Balance (USD bi) 50,0 40,0 30,0 20,0 10,0 - (10,0)...Mainly explained by the contraction of exports, that negatively affected commodity prices and the slowdown in demand of major trading partners. As séries de contas externas não consideram a metodologia adotada pelo Bacen a partir de abril 2015. Source: Market Consensus/BCB, MDIC, FCF 1/ May, 3 2015 24

Trade Balance 2014 Main Products Main Exported Products 2014 Main Imported Products 2014 Main Exported Products Value % Share 1 - Soybeans & products 31.408 14 2 - Ores 28.402 12,6 3 - Oil and fuel 25.175 11,2 4 - Transport material 20.374 9,1 5 - Meats 16.891 7,5 6 - Chemicals 15.051 6,7 7 - Metallurgic products 14.423 6,4 8 - Sugar & ethanol 10.357 4,6 9 - Machines & equipaments 8.671 3,9 10 - Paper & pulp 7.218 3,2 11 - Coffee 6.616 2,9 12 - Footwear & leather 4.287 1,9 13 - Eletric equipament 3.965 1,8 14 - Precious metals and stones 2.817 1,3 15 - Textiles 2.536 1,1 Main Imported Products Value % Share 1 - Fuel and Oil 45.040 19,7 2 - Mechanical Equipment 31.874 13,9 3 - Electrical and Electronical Equipment 27.013 11,8 4 - Motor Vehicles and parts 19.470 8,5 5 - Organic and Inorganic Chemicals 12.834 5,6 6 - Plastics and its Products 8.849 3,9 7 - Fertilizers 8.443 3,7 8 - Iron, Steel and its Products 7.468 3,3 9 - Pharmaceutica 7.427 3,2 10 - Optical and Precision Equipment 6.761 3 11 - Rubber and its products 4.091 1,8 12 - Cereals and milling products 3.183 1,4 13 - Airplanes and its parts 2.571 1,1 14 - Synthetic and Arificial Filaments and Fibers 2.503 1,1 15 - Cooper and its products 1.986 0,9 Source: Secex, Mdic 2/ May, 3 2015 25

Current Account The current-account deficit was the widest in 13 years. The deficit is boosted by the trade balance deficit. Current- Account Balance 10 4 1,8 1,6 1,3 2 1,5-10 -8 0,8 12 14 14 0,1-30 -24-31 -33-25 -25-23 -28-24 -0,5-1,5-50 -1,7-1,5-2,1-2 -2,2-2,8-48 -53-54 -2,5-70 -90-3,5-4 -4,3-3,8-4,2-3,4-81 -83-76 -3,9-4,0-3,9-4,5 This deficit was funded mostly by a higher volume of external loans, which drove the external debt up. Source: BCB, Credit Suisse, FCF USD billion As séries de contas externas não consideram a metodologia adotada pelo Bacen a partir de abril 2015. % of GDP 3/ May, 3 2015 26

Foreign Direct Investments (FDI) Foreign direct investments (FDI) are expected to decline in the upcoming years as a result of lower growth perspectives for the local economy Intercompany Loans Capital market share As séries de contas externas não consideram a metodologia adotada pelo Bacen a partir de abril 2015. Source: BCB, FCF 1/ May, 1 2015 27

Credit Operations 28

Credit x Income Commitment x Delinquency The population leverage has become much bigger in recent years, with no room for new financial loans. According to the current scenario, interest rates have gone up and credit costs are higher nowadays. 70,0 60,0 Credit Operations (%GDP) Income Commitment (%) Delinquency Rate for Individuals (%) 50,3 52,6 54,7 56,8 58,1 50,0 40,7 43,9 44,1 46,5 40,0 35,5 30,0 31,3 30,2 20,0 17,4 18,2 18,2 18,9 19,6 19,7 23,3 22,9 21,9 22,0 22,0 21,8 10,0 6,2 6,9 6,4 7,2 7,0 5,3 6,7 6,9 5,7 6,8 5,4 5,6-2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F Source: BCB, FCF 1/ May, 6 2015 29

Delinquency Delinquency remained relatively stable in 2014 following the reduction in credit concessions to auto financing. Total loans to this segment decreased 4.5% in 2014, leading delinquencies to decline from 5.2% to 3.9%. Delinquency Rate (%) The rising unemployment, low confidence, and tightened monetary and fiscal policies, creates an expectation that credit growth continue its gradual deceleration and delinquency tends to increase, as it adjusts to a challenging economic scenario for companies and consumers. Source: BCB, Credit Suisse 2/ May, 6 2015 30

Credit Operations As a result of the current monetary tightening cycle, spreads and interest rates also increased in the period for both earmarked and non-earmarked operations. Total Credit Operations (% GDP) 43,9 44,1 46,5 50,3 52,6 54,7 56,8 58,1 2009 2010 2011 2012 2013 2014 2015F 2016F Based on the scenario for economic activity in the current year, the continuity of monetary politic and the ongoing fiscal adjustment, the deceleration in credit operations is expected. Source: Market Consensus/BCB, FCF 3/ May, 6 2015 31

BNDES participation Since 2008, National Treasury injected more than BRL 400 bln in the Public Banks to support credit originations and offset the effects of financial crisis No further contribution from National Treasury to public banks in the next 3 years, due to the high impact on public accounts, with reflects over sovereign credit ratings Track Record of Money Injection on Public Banks (BRL bln) Source: BNDES, Credit Suisse, FCF 4/ May, 6 2015 32

TJLP x Selic Current tightening cycle (initiated on October 2014) widened the gap between Selic and TJLP ( Long Term Interest Rates ) to 625 bps (biggest gap since 2008). In the last week of December, CMN announced an increase of TJLP to 5,50%py. Market currently predicts further increases on TJLP along 2015, so that it will surpass 6,00%py level at year end. Source: BNDES, FCF 5/ May, 6 2015 33

Bank loans Participation of public on total credit portfolio increased from 34% in 2007 to 59% on December 2014. Origination pace of credit operations at public banks decreased from 11.2% yoy to 10.5% yoy in April, totaling BRL 3.061 trillion, which represents 54.5% of GDP. Source: Credit Suisse, FCF 6/ May, 6 2015 34

Public Accounts 35

Public Accounts Fiscal account has deteriorated very sharply since 2011 at both the flow (fiscal deficit) and stock (gross public debt) levels. The consolidated public sector recorded a primary deficit of 0.6% of GDP in 2014 as a direct result of lower tax revenues for the central government due to less contributions related to a smaller economic growth and an increased in the government expenditure. Brazilian Debt (% GDP) 60,9 53,4 54,2 58,7 57,2 58,9 61,7 61,9 42,1 39,2 36,4 35,2 33,8 34,1 35,0 41,0 2009 2010 2011 2012 2013 2014 2015F 2016F Net Debt Gross Debt Gross debt has increased owing to the continued direct issuance of BRL 60.0 billion to the BNDES and a fiscal deficit (primary surplus minus interest payment) of 6.7% of GDP. The steady erosion of the fiscal stance pushed net and gross public debt up. Net debt is gross debt minus financial assets corresponding to debt instruments. These financial assets are: monetary gold and SDRs, currency and deposits, debt securities, loans, insurance, pension, and standardize guarantee schemes and other accounts receivable. Source: Market Consensus /BCB, FCF 1/ 5 36

Primary & Nominal Results The primary result posted a deficit of 0.6% of GDP in 2014. The cumulative primary surplus in 2015 has reached 28% of the objective set for the year (1.2% of GDP). Recession will make it an even more challenging goal for the year, and Central Bank already admits it. The market expects a primary surplus of 0.9% of GDP in 2015. For 2016, the forecasted target is 2.0% of GDP. Public Sector Primary Result 0.9-0.6 Source: Credit Suisse, FCF 2/ May, 5 2015 37

Fiscal Measures Source: Santander, FCF Before Wage bonus Needs 1 month of work Needs 6 months working Unemployment insurance Needs 1 month of work Needs 18 months working for 1st request ( 12 months for the 2nd request and 6 months for the 3rd) Death pension Pay the total amount (w/o limits) Needs 2yrs married and 2yrs of contribution to the pension system. Payment depend on the age expectancy: 50% of the total amount is paid. Young widow(er) will not receive Unemployment insurance to fishermen When it is not fishing season 3yrs as fisherman needed and cannot receive this benefit if receives another (as illness assistance) Sick leave as of 15 days out of work due to illness As of 30 days out of work due to illness ( 12 months for the 2nd request and 6 months for the 3rd) None CIDE at gasoline and diesel prices/ CIDE and PIS/Cofins (tax on gasoline and CIDE at 10 cents in gasoline price and 5 cents in diesel price/ PIS/Cofins at PIS/Cofins at BRL0.266 cents in gasoline price diesel) 12 cents in gasoline and at 10 cents in diesel prices and at BRL0.148 cents in diesel price IPI (tax on cars production) 3% - 9% 7% - 13% IPI (tax on cosmetics) Wholesale prices equalized to retail prices IOF (tax on finacial operations) on consumer 1.50% loans 3% PIS/Cofins on imports 9.25% 11.75% PIS/Cofins on financial revenues 0% 4.65% FIES (government funded scholarship Extended the period to fulfill its obligations with the private schools on the program) program, reducing its short term monthly Financial institution's Social Contribution on 15% Net Income (CSLL) 20% 2015 Budget Government will freeze BRL 69.9 billion reais (USD22.5 billion) of spending from 2015 budget. In January the Government has reinforced its commitment to fiscal adjustment (on spending and revenue) and freeing up the tariffs. However some measures to effect must be approved by the Senate by the end of May, once they expire on July 1. 3/ 5 Now 38

Sovereign Ratings Brazilian Sovereign Credit Ratings S&P downgraded, on March 2014, Brazil's long-term foreign currency sovereign rating one notch to BBB-, adopting a stable outlook. Moody s and Fitch agencies have indicated a likely downgrade in case of no improvements on fiscal accounts and inflation/growth performances. On March 2015, S&P maintained Brazil s long term sovereign rating in BBB-, keeping a stable outlook due to the economic policy changes proposed by the government. Outlook Positive Stable Negative Source: Rating Agencies, FCF 4/ 5 39

Sovereign Ratings Fiscal deterioration and Growing Debt Focus on Economic Team (% GDP) Monetary tightening Fiscal adjustment Fx adjustment (End of BCB swap program) Brazil economic challenges have increased Economic recession High inflation Fiscal deterioration and growing debt Low growth and High Inflation Downside risks Inflation Growth Market expectation * % yoy Low confidence indexes and low growth Challenging external conditions Corruption scandals and complex political system Sustainability of the adjustment process Lack of microeconomic reform agenda * Based on Focus research, April 10th, 2015 Source: Rating Agencies, Fitch 5/ 5 40

Politic 41

Dilma s Approval After Dilma Rousseff s reelection, the disclosure of several corruption scandals, depreciation of the local currency, the upward trend of inflation and the labor market deterioration, Datafolha reported strong decline in government approval, reaching now 62% of disapproval. In addition, the fiscal adjustments in place and cuts in social benefit entitlements are likely bring about a decline in political support from unions and social movements, which are among the most traditional supporters of the ruling PT. Source: TSE, FCF 1/ 2 42

Confidence Index The sharp fall presented since the beginning of the 2014 is still downhill. In 2015 the confidence index already reached the worst level since 2005. This result was motivated by the worsening of domestic scenario, the expectations and the worries about labor market, inflation and the risk of water and electricity shortage. 125 Confidence Index Social Movements 120 World Cup 115 110 105 100 95 90 85 83,3 80 75 76,1 Source: FGV, CNI, FCF Consumer Confidence Index Industry Confidence Index 2/ 2 43