J.P.

Morgan Live Teleconference

Brazil’s Economic
Outlook and Agenda BC#
Roberto Campos Neto
Governor of Banco Central do Brasil

February 11, 2021

 COVID-19
Global scenario Covid-19: new cases and new deaths
New deaths close to historical highs in UK and US.

New cases/million New deaths/million

900 (7-day rolling average) 20 (7-day rolling average) 20

18 18
800

16 16
700
14 14
600
12 12
500
10 10
400
8 8
300 US
6 6
UK
200 Brazil
4 4
Europe ex UK
100 Lat. Am. ex Brazil
2 2

0 0 0
Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Source: Our World in Data. Last data available: February 9, 2021.

2
 COVID-19
Global scenario Mobility and impact on GDP
Increased restrictions to mobility had a negative impact on GDP
Mobility to workplaces Estimated impact on GDP
(change comparing to pre-Covid period, in %) (in %, using GS effective lockdown index, 7-day moving average)

United Kingdom -48

Israel -39

Germany -31

United States -30

South Africa -27

France -25

Russia -18

India -17

Japan -13

Brazil -5
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Google Mobility Report (Feb 5, 2021). Source: Goldman Sachs Global Investment Research.
3
 GLOBAL ECONOMY
Vaccination Covid-19 vaccination: doses administered
The biggest vaccination campaign in history

Millions of doses administered Global evolution

(millions and % of population) (million of doses administered)
160
147.2 MM 147.20
World
(1.9%)
43.2 MM 140
USA
(13.1%)
China 40.5 MM (2.8%) 120

European Union 18 MM (4%) 100

13.2 MM
United Kingdom
(19.4%)
80
India 6.6 MM (0.5%)

Israel 5.8 MM (67.4%) 60

United Arab Emirates 4.5 MM (45.8%) 40

Brazil 3.8 MM (1.8%)
20
Turkey 2.7 MM (3.2%)

Russia 1 MM (0.7%) 0

Rest of the world 8.8 MM (0.2%)

Note: the number of doses administered is less than or equal to the number of people vaccinated. In
some countries, some people have already taken the second dose. Therefore, the percentage in relation
to the population should be understood as “maximum percentage of the vaccinated population”. Source: Our World in Data, information until 2021, Feb 9th, 2021
4
 COVID-19
Global scenario Israel: vaccination effects
Cases and hospitalizations are falling steeply among vaccinated age groups.
Effects of vaccination
Cases Hospital admissions

Source: Financial Times (Segal et. al., Weizmann Institute. Telaviv University).
5
 GLOBAL ECONOMY
Economic activity
Economic activity is off to a slow start of the year

Resumption of growth
(economic activity index* – per country)

100

80

60

40

20
jan-20 apr-20 jul-20 oct-20 jan-21

* 08/01/2020 = 100 * 01/08/2020 = 100

Source: Bloomberg
6
 GLOBAL ECONOMY
United States United States
New Covid-19 wave weakens recovery, but fiscal support might be positive.
36 115 109.9
33.4
p.p. and QoQ annualized

27 110

Consumption
105 102.9
Real GDP

18

feb/20=100
9 100
4 95 96.4
0
92.5
-9 90
-18 85
-27 80
-31.4
-36 75
Q3 17

Q2 18

Q3 19

Q2 20
Q1 17

Q2 17

Q4 17

Q1 18

Q3 18

Q4 18

Q1 19

Q2 19

Q4 19

Q1 20

Q3 20

Q4 20
Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20
PCE Services Durables Non durables
Consumption Investment Change in Inventories
Net exports Government GDP (QoQ SAAR) 145 110

Consumer Confidence
100 130 100
Duration (% of the total)

Diffusion index
Unemployment

1924
80
60 115 90

40 4721
20 100 80

0
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 85 70
14 weeks or less Between 15 and 26 weeks Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
27 weeks and over % Temporary Conference Board Michigan (right)
Source: Bloomberg.
7
 GLOBAL ECONOMY
Europe Europe
Uneven economic recovery.
GDP Retail sales
4Q2019=100 Jan 2020=100
100 109

103
96

97
92

Jan 2020 = 100

91
88
85
84
79
80
73

76
67
2019Q4 2020Q1 2020Q2 2020Q3 2020Q4(f) 2021Q1(f)
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20
United Kingdom Euro Zone Germany Italy France Spain Netherlands

Source: Bloomberg. Seasonally adjusted data.

8
 GLOBAL ECONOMY
China China
GDP increased 2.3% in 2020. Despite the recovery, private consumption and investment still below pre-pandemic levels.
10
GDP Components: Supply 6.5

Change (% YoY) and

GDP: Demand

contributions (p.p.)
5
40
0
30
19.7 -5
20 15.6
13.2 9.9
-10
10 3.5 4.1 5.9 7.3 5.3 6.6 5.4 6.3 6.3 7.6 6.2 7 6 7 6.7 6 4.5
Change (% YoY)

Q2 16

Q4 16

Q2 17

Q4 19

Q2 20

Q4 20
Q2 15

Q4 15

Q4 17

Q2 18

Q4 18

Q2 19
2.7 2.5 2.2
0
-3.2 -1.8 Consumption (p.p.) Net Exports (p.p.)
-10 -6.1
-10.2 -9.4 Investment (p.p.) GDP (% YoY)
-20 -14

Fixed Asset Investment

-17.5 -17.8
15
-30 6.8
5.4 5.3
5 2.9

%, Year to date
-40 -35.3 4.7
1.0
Construction

Transport

Others
Trade
Industry

-5
Farming

Accom/Rest.

Finance

Real Estate

IT Services

Rent,Leas,Bus Serv.
-15

-25

-35

Q4 19 Q1 20 Q4 20
Fixed Asset Investment Private Public
Sources: IMF and NBS.
9
 GLOBAL ECONOMY
Ongoing recovery Emerging markets
Manufacturing PMI Retail sales (YoY)
67 30

62 10

Brazil
-10
57 India
-30
Colombia
52 South Africa -50
Russia Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20
Brazil Chile Colombia
47 Mexico South Africa Russia

Mexico
GDP forecasts (%)
42
Peru
China
37 Chile
Colombia
Argentina
32 Thailand
Mexico
Brazil
Brazil 2022
27 South Africa 2021
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Russia
0 2 4 6 8 10
Sources: ABSA and Markit. Sources: Bloomberg and Focus Report.
10
 GLOBAL ECONOMY
Inflation EMEs: inflation
Pandemic lead to deceleration in services inflation in EMEs. Pressure on food inflation continues to be widespread.

CPI Services (% YoY) Food Inflation (% YoY)

12% 25%
5% 13%

11.6% 12% 10% 19.2%20%

4% 18.1%
3.8%
11%
8% 7.8%15%
3% 2.9%
10% 7.0%

YoY, sa
6.4%
YoY, sa

2.1% 9% 6% 6.0% 10%

2% 5.5%
1.6%
1.5%
8% 4% 5%
1% 3.9%
1.6%
0.5% 7%
2% 0%
0%
6%
-0.5%
0% -5%
-1% 5%

Nov-20
Jun-20

Aug-20
Apr-20

May-20
Jan-20

Jan-21
Dec-20
Jul-20
Mar-20

Sep-20
Feb-20

Oct-20
Nov-20
Jun-20

Aug-20
Jan-20

Apr-20

Jan-21
May-20

Dec-20
Jul-20
Mar-20
Feb-20

Sep-20

Oct-20

Chile Mexico Russia

South Africa Brazil Chile
China Mexico Russia South Africa Colombia India
Colombia Turkey (right) China (right) Brazil (right) Turkey (right)

Sources: Bloomberg, Refinitiv, National Statistical Institutes.

11
 GLOBAL ECONOMY
Fiscal response Fiscal response versus GDP
35
Reduction in expected growth for 2020-2021 (before - after the pandemic)
30 Fiscal answers (% of GDP)

25
% and p.p.

20

15

10

Sources: FMI, Bloomberg, Focus Report for Brazilian GDP. Last updated in Feb5th, 2021.
12
 GLOBAL ECONOMY
Fiscal Policy Fiscal response
Gross Debt – Emerging markets Brazilian Gross Debt projection for 2020: decomposition of variation
Projection in january/2021 compared to projection in october/2020
(% of GDP) 0.0
0.0
140
140 -1.0
-1.0
-2.0
-2.0

120
120
-3.0
-3.0

p.p.
-4.0
-4.0
-5.0
-5.0
100
100 -6.0
-6.0
-7.0
-7.0
-8.0
-8.0
8080 Exchange rate Primary Deficit Others GDP and Change in GGGD
Inflation (projected)

Historical pattern of general government debt)

6060
140 WWI WWII Great
lockdown
120 Global
4040 Financial
Crisis
100

% of GDP
80 AEs
2020 EMEs
60

40
00
20
2013

2014

2015

2016
2011

2012

2017

2018

2019

2020

2021

1880

1894

1957

1971

1985
1887

1901
1908
1915
1922
1929
1936
1943
1950

1964

1978

1992
1999
2006
2013
2020
Sources: FMI Fiscal Monitor oct/20 and oct/19, Credit-Suisse, BCB. 13
 GLOBAL ECONOMY
Fiscal Policy Fiscal response

EMEs fiscal stance to tighten in 2021 EMEs fiscal space and policy intention assessment

Source: J.P. Morgan.

14
 GLOBAL ECONOMY
Markets Risk Appetite
Differentiation in risk appetite for emerging economies with unfavorable economic fundamentals remains.

Risk Appetite

2 2.0

EME Group 1:
1
Malaysia, Indonesia, Chile, and Russia.
1.0

0.62
0.53
0 0.0

Gross Debt/GDP (average 2020) = 40%

standard deviations

-1 -10
.

-1.22
-2 Gross Debt/ GDP
-20
.

100 EME Group 2:

Group 1 Group 2
-3 -30
.

Brazil, South Africa, Turkey, Colombia,

-4 50 -40
.

Advanced Mexico, and India.

EM (Group 1)
-5 -50
.

Gross Debt/GDP (average 2020) = 71.7%

0 EM (Group 2)
-6 2018 2019 2020F 2021F
-60
.

-7 -70
.

2017 2018 2019 Jan Mar May Jul Sep Nov Jan
2020 2021

Sources: BCB, Bloomberg, Refinitiv, IMF, Fed St Louis. Gross Debt: IMF. Data up to January 29th.
15
 GLOBAL ECONOMY
Markets Financial conditions
Financial conditions more stimulative in the US.

Financial conditions (GS)

102

101

100

99

98

97
Nov-19 Feb-20 May-20 Aug-20 Nov-20 Feb-21

US Euro Area UK Japan

Source: Bloomberg
16
 GLOBAL ECONOMY
Markets Reflation trade
Reflation trade – Bigger move in the US compared to advanced economies in Europe

Commodities price index – CRB

460
5 years implicit inflation
430
3.5
400

370

2.5 340
% 2/1/2021 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21
2.06

1.5 1.20

US 10 years yield (%)

1.38
1.10
1.00
0.90
0.80
0.5 0.70
Feb-11 Feb-13 Feb-15 Feb-17 Feb-19 Feb-21 0.60
USD EUR 0.50
May-20 Aug-20 Nov-20 Feb-21
Source: Bloomberg
17
 GLOBAL ECONOMY
Markets Equities
Optimism after Pfizer results announcement

S&P baskets and reopening S&P baskets and Covid-19 2nd wave

France lockdown Pfizer

180 150

130 130

80 110

30 90
Feb-20 May-20 Aug-20 Nov-20 Feb-21 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

S&P 500 INDEX GS US Stay at Home GS US Global Health Risk S&P 500 INDEX GS US Stay at Home GS US Global Health Risk

GS Rate Sensitive Fins High Default Probability GS Rate Sensitive Fins High Default Probability

Source: Bloomberg
18
 GLOBAL ECONOMY
Interest rates Interest rates

* ex-post annual rates

Sources: Bloomberg, BCB.
19
 GLOBAL ECONOMY
Markets EMEs: yield curves
Brazil: upward shift in the yield curve
Yield curves

South Africa

Brazil Russia
Rate (%)

Mexico
Colombia
Change since
12/10 (b.p.)

Tenure
Source: Bloomberg
20
 GLOBAL ECONOMY
Markets Nominal interest rates
Selected countries
Nominal interest rates 10 years (%) slope 2 x 10 years (b.p.)

Source: Bloomberg
21
 GLOBAL ECONOMY
Markets EMEs: Portfolio flows
Stocks (YTD) - US$ billions

India
Brazil
Taiwan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nov Dec

South Africa Brazil Korea India Thailand Turkey

Source: Bloomberg.
22
 GLOBAL ECONOMY
Markets U.S.: “small cap” firms
$bn
1,600 obligations (US$ bi) 700

1,400 n°of firms in Russell 3000 with"zombie" status (right) 650

Russel Index (small caps) – Total debt/EBITDA
1,200 600

“Zombie” Firms
1,000 550
14 800 500

600 450
12
400 400

200 350
10
Oil & EM 0 300
Internet Bubble '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
Colapse
8
GFC

Share of firms making a

6

financial loss (%)

4

2
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12 Feb-15 Feb-18 Feb-21

Sources: Bloomberg, The Economist, State Street.

23
 GLOBAL TRADE
Global Value Chains GVCs and global trade
Trend: Restructuring of GVCs. After a retraction similar to that observed during the GFC, trade is recovering at an accelerated pace.

FDI, Trade, GDP and GVCs – Trend 2010-2019 Volume of international trade
110 (Seasonally adjusted data)
1990s 2000s 2010s 105
FDI: 15.3% Trade: 6.2% FDI: 8% Trade: 9% FDI: 0.8% Trade: 2.7%
GDP: 3.8% GDP : 7% GDP: 3.1% 100

Index 95
2010 = Trade slows Share of GVC
100 down, but on trade (%)
follows GDP 90 GFC (Aug 2008=100)

85 COVID-19 (Dec
2019=100
80 US exports

FDI and GVC

trends
75 Euro Area exports
stagnate
70 China exports

65
FDI trend Trade GDP GVCs 0 2 4 6 8 10 12 14 16 18 20 22 24
Months since the crisis began

Sources: UNCTAD, WTO, CPB.

24
DOMESTIC ECONOMY
Policy responses The roles of monetary and fiscal policies
Central Bank of Brazil and Ministry of Finance measures

Central Bank of Brazil Ministry of Finance

• Monetary and FX • Direct transfers

policies • Credit
measures • Tax reliefs and
• Liquidity and Capital deferrals

25
 DOMESTIC ECONOMY
Facing the crises BCB’s response
EMEs – Comparative Overview

Liquidity Support Credit Support

(% of GDP) (% of GDP)

17.5% Brazil
20.0% Brazil

Source: FSB/BCB – updated until 01/28/2021 26

 DOMESTIC ECONOMY
Economic Growth Brazil: GDP

GDP
(2019=100; s.a.)
104

102 2021:
+3.47%
100 2020:
-4.30%
98
Median of
96 market
expectations
94
(Focus report)
92 Effective data

90 Market forecast, seasonally

adjusted
88
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
(f) (f) (f) (f) (f)
2014 2015 2016 2017 2018 2019 2020 2021
Data projected by the market were seasonally adjusted by the BCB, considering that the seasonal
Sources: IBGE and Focus Report (Feb 5th, 2021) pattern will remain the same.
27
 DOMESTIC ECONOMY
Economic growth High frequency indicators

Electricity charge Vehicle sales Debit card sales

(mm7d; 2019=100) (2019=100; s.a.) Selected sectors, Nominal values
YoY change, 7-day moving average
110
114 89
107
74
105 100
59
93
86 44

100 79 29
72 14
65
-1
95 58
-16
51 Hotels, saloons
44 -31 and restaurants
90 Cars and light
37 commercials -46 Markets

30 Trucks
-61 Construction
F85 23
-76
F
jan-19 jul-19 jan-20 jul-20 jan-21 Jan-19 Jun-19 Nov-19 Apr-20 Sep-20
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Sources: ONS, seasonally adjusted by BCB; Fenabrave. Source: Câmara Interbancária de Pagamentos (CIP)
28
 DOMESTIC ECONOMY
Confidence indicators

Business confidence X consumer confidence Consumer confidence

120 120 By monthly income range (in BRL thousand)
115 Manufacturing
115
110 Construction 110
105 105 Average 2018-
100 2019= 100
100
95 Average Retail
95
2018-2019= Services > R$ 9.6 thousand
90 100 90 R$ 4.8 to 9.6 thousand
85 Consumer 85
R$ 2.1 to 4.8 thousand
80 80
< R$ 2.1 thousand
75 75
70 70
65 65
60 60
55 55
Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21
Sources: FGV. Seasonally adjusted data.
29
 DOMESTIC ECONOMY
Mobility and economic activity
Change comparing to pre crisis levels (%)
Expanded retail sales Industrial production
10 4 7 5
5 2 0
-4
0 -5
-12 -3
-5 -10
-8 -15
-10 -20
-13 -20
-15 Retail sales Industrial production
-28 -25
-20 Mobility to retail points -18
-30
-36 Mobility to workplaces
-25 -23 -35
-30 -44 -28 -40
Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20

0
Services 4 1
IBC-BR 1
-3
-9
-5 -10 -3

-17 -19
-10 -7
-24 -29
Services
-31 IBC-Br Average mobility
-15 Average mobility -11
-39
-38
-20 -45 -15 -49
Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20
Sources: IBGE, BCB, Google Mobility Report. Last data: January 26th, 2021.
30
 DOMESTIC ECONOMY
Economic Growth Reduction of expenditure during the pandemic

Breakdown of circumstantial and precautionary effects • Circumstantial effect (CE): direct result of restrictions imposed on
economic activities and changes in behavior to mitigate exposure to the
virus. Phase-out of this effect with vaccination;

• Precautionary effect (PE): resulting from the impacts of the

pandemic on economic activity (employment and future income) and
may remain due to the usually slower adjustment of the labor market;

• Credit card and formal labor market data identifying that:

o Public servants, due to employment stability, have been less
affected by PE;
o Older workers most affected by CE.

• CE was dominant at the valley in April 2020;

• PE predominates marginally.
o Potentially relevant, given the lag in the labor market.

Source: BCB
31
 DOMESTIC ECONOMY
Income vs. Retail
Revenues Super & Hipermarkets vs Labor effective income

270,000
155
250,000
145
230,000
135
210,000 125
190,000 115
170,000 105
150,000 95
130,000 85
110,000 75
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2013 2014 2015 2016 2017 2018 2019 2020

Nominal effective income from all jobs Nominal Sales Super & Hipermarkets (2014:100)

Source: IBGE
32
 DOMESTIC ECONOMY
Inflation Consumer Inflation: IPCA
Y/Y change (%) 22 IPCA breakdown (% a/a)
11
IPCA
10 15
Meta
9
8
8

7 1

6
-6
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
5 4.56
Food at home Administred prices Manufactured goods Services
4

3 Market expectations (Focus)

In February 5, 2021
2
2021 2022 2023
1 Inflation target (%) 3.75 3.50 3.25
0 Median of expectations (%) 3.60 3.49 3.25
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

Sources: IBGE, BCB, Focus Report.

33
 DOMESTIC ECONOMY
Implicit Inflation

Implicit Inflation – 2021 and 2022 Implicit Inflation – 2023 and 2024

5.5% 6.0%

5.0% 5.5%
R$ 56,8 bi
4.5%
5.0%
4.0%
4.5%
3.5%
4.0%
3.0%

2.5% 3.5%

2.0% 3.0%

Apr-20
Mar-20
Nov-19

Nov-20
Aug-20
Jul-20
Oct-19

Oct-20

Dec-20
Dec-19

Feb-21
Feb-20

Sep-20
Jun-20
Apr-20
Mar-20

Jan-20

Jan-21
Nov-19

Nov-20

May-20
Aug-20
Feb-20

Jul-20

Feb-21
Sep-20
Oct-19

Oct-20

Dec-20
Dec-19

Jun-20
Jan-20

Jan-21
May-20

Implícit Inflation 2021 Implicit Inflation 2022 Implicit Inflation 2023 Implicit Inflation 2024
Source: BCB, updated to 02/03/2021.
34
 DOMESTIC ECONOMY
Labor market Labor market

Unemployment and participation rates Net formal job creation

%, seasonally adjusted (thousand; s.a.)
16 63 370
15.2
61.8 270
15 62
170
14 61 70 R$ 56,8 bi
13 -30
60 -130
12 Accommodation and
59 -230 food service activities
11 -330 Retail
11.3
58 -430
10 Construction
-530
56.7 57 Manufacturing
9 -630
Unemployment rate 56 -730 Other sectors
8
-830
Participation rate (right axis) 55
7 -930 Total

6 54 -1,030
Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Nov-19 Nov-20 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20
Source: Ministry of Economy (CAGED data). Data is seasonally adjusted by BCB. “Other sectors” is an
Source: IBGE (monthly data extracted from PNAC-C). approximation, since seasonally adjusted data do not add up.
35
DOMESTIC ECONOMY
Monetary Policy
236th Copom meeting

• In its 236th meeting, the Copom unanimously decided to maintain the Selic rate at 2.00% p.a.

• The Committee judges that this decision reflects its baseline scenario for prospective inflation, a higher-than-
usual variance in the balance of risks, and it is consistent with the convergence of inflation to its target over
the relevant horizon for monetary policy, which includes 2021 and, mainly, 2022.

• According to the forward guidance introduced in the 232nd meeting the Copom would not reduce the
monetary stimulus as long as specified conditions were met. Based on new information, the Committee
judges that those conditions no longer hold, as inflation expectations, as well as inflation projections for its
baseline scenario, are sufficiently close to the inflation target over the relevant horizon for monetary policy.
Therefore, the forward guidance no longer holds and, henceforth, monetary policy will follow the usual
analysis of the balance of risks for the prospective inflation.

• The Copom reiterates that the removal of the forward guidance does not mechanically imply interest rates
increases, since, at this moment, uncertainties regarding the evolution of growth still prescribe an
extraordinarily strong monetary stimulus.

36
 DOMESTIC ECONOMY
Fiscal policy Fiscal risk

New issuances vs total outstanding debt average maturity LFT risk premium
Average maturity
b.p.
in years
8 40
7
6 30
5
4 20
3
2 10
1
0 0
2007 2009 2011 2013 2015 2017 2019 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21

Outstanding debt New issuances mar-21 set-21 mar-22 mar-23 mar-25 mar-26

Source: STN, UBS.

37
 DOMESTIC ECONOMY
Markets Debt and nonresident participation
Federal Domestic Public Debt

Source: B3, BCB.

38
 DOMESTIC ECONOMY
Markets Accumulated flows on the stock exchange

BRL bn

100
80
+R$54.7 bn
60
40
BRLBRL 56.3
+53,6 bibn
20
0
BRLBRL -8.3
-10,7 bi bn
-20
BRL -31.1 bnn
-40
-60
-80
-100
Jan-20 Apr-20 Jul-20 Oct-20 Feb-21

Individuals Institutionals Foreigners

Source: B3
39
 DOMESTIC ECONOMY
External sector

Brazil Exchange rate and terms of trade Current account – Total and disaggregated
12 month moving average, % of GDP
4.5 -15
3.5%

-10 2.5%

3.5 1.5%
-5
0.5%
0
-0.5%
2.5
5 -1.5%

-2.5%
10
1.5
-3.5%
15
-4.5%

0.5 20 -5.5%
Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21 Jan-08 Jul-09 Jan-11 Jul-12 Jan-14 Jul-15 Jan-17 Jul-18 Jan-20
Trade balance Services
Real exchange rate Terms of trade (reversed)
Income Current account
Source: BCB, Bloomberg.
40
 DOMESTIC ECONOMY
Credit market Nonearmarked credit
Credit increase amid the crisis. Interest rates at low historical levels.

76%
Outstanding credit Interest rates

Centenas
28%
(YoY) 71% (% per year)
25%
66%
22%
21.1%
61%
19%
16% 56%
15.2%
13% 51%

10% 10.4% 46%

7% 41%
4% 36%
1% 31%
-2% 26%
-5% 21%
-8% 16%
-11% 11%
Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20

Households Corporate Total

Source: BCB
41
Technological
Agenda

42
 Cooperative credit
INCLUSION
Microcredit
Currency conversibility
Initiatives for capital market

Innovation
COMPETITIVENESS Market efficiency
International reserves

Rural credit
TRANSPARENCY Housing credit
Relationship with Congress
Transparency of Monetary Policy
Communication plan for BCB actions
Relationship with foreign investors

Financial education
EDUCATION

43
Pix: The Brazilian
Instant Payment
44
 7 reasons that make Pix unique

Use Enriched Open

Speed Availability Safety Convenience case multiplicity data Environment

45
 PIX registration

Types of keys Distribution by age

(in millions) (Transactions X population)

100% 4.1% 4.0% More than 60 years

15.7% 7.7% 7.7% 50-59 years
90%
Random key, 35.4
52.7 MM 80% 12.4% 17.2% 17.3% 40-49 years
households with 70%
128.1 E-mail, 20.5 13.8%
60% 30-39 years
MM keys
Total 50% 15.8%
34.1% 33.8%

133.0 MM 40%
Phone, 29.2
14.9%
30% 20-29 years
Individual's
3.3 MM ID number
20% 35.3% 35.6%
companies 27.40%
(CPF), 45.9 10%
5.8 Companie’s ID 1.50% 1.59% 19 years or less
MM keys 0%
number; 2.8 Population - PNAD Transactions - Transactions - Dec/20
Survey 2019 Nov/20

46
Source: BCB. Last data: December 2020.
 Pix transactions
Number of transactions and volume Pix versus other instruments
(million of transactions and BRL billions) (in millions of transactions and % of total)

400
Volume
160.0 140.0
R$ 151 billions R$121.4 bn 350 56.3 (15%)
140.0 120.0
300
120.0 Quantity
100.0
177.9 millions
100.0
250
181.4 (47%)
80.0
200
80.0
60.0 150
60.0 29.9 (19%)
R$29.6 bn
40.0 100
40.0
95.1 (60%) 144.3 (38%)
20.0 20.0 50
33.5 mm 144.3 mm 33.5 (21%)
- 0.0 0
Nov-20 Dec-20 16-30 Nov/2020 Dec/2020

Number of transactions (millions) Volume (R$ billions) PIX TED DOC

47
Source: BCB.
AGENDA BC#
Open banking Highlights for 2021

Open Banking

• Operating rules approved

• Implementation schedule

How does it Open banking

work today?

48
AGENDA BC# Convergence

Texting
Financial
Innovation

Payments

Intense use of
Content clouding

49
 AGENDA BC# Innovation in the financial system

2021/2022
• Simplification
• Internationalization
• Convertibility
Digital
Open Banking currency

Innovation in the
currency

50
Measures:
• BCB’s S&E Responsibility
• Partnerships
• Policies
• Supervision
• Regulation
 More technology
The epidemic has accelerated technological change
in medicine, education, finance, communication

Common factors in the recovery

More sustainable and more inclusive growth

World trade
Vision of the Changes in global value chains

future
Low interest rates and
high liquidity in the world
There are challenges, but also opportunities to
reinvent the economy with private resources
 Secular change in
the workforce

Change in
standards of
consumption and
production
Government
actions

A changing
world
Technology

53
 Thank you!
Roberto Campos Neto
Governor of Banco Central do Brasil
February 11, 2021