Petrobras' Energy Sector Outlook

CORPORATION ☐ ■ ☐ Summary Macroeconomics Brazil The global financial crisis affects the Brazilian Banking System mainly by lack of USD-Liquidity, but not in terms of weak assets in the portfolio, credit losses, trading losses etc. This was prevented to a large extend by the restrictive legal framework which doesn't allow Brazilian banks to trade CDS. Actually the stable and very profitable banking system will be a strong pillar for the Brazilian economy development. After a soft landing during the world financial crisis in 2008, Brazilian economy is now stagnant growth, however showing mixed signals. Having flirted with recession the last year, it seems the economy is finally reacting and posting a timid growth. The government is actively stimulating consumption by tax reductions, injecting capital into the economy for investments and by continuously reducing interest rates. GDP rose second Q2-2012 by 0.4% slightly above first quarter at 0.1% mainly due to strong agricultural expansion. Annual GDP growth has been reduce again to 1.57%. Anyway, Brazil has important players in the commodity segments with a strong domestic and international demand on the long-term and therefore might get back to higher growth rates. Besides, high international reserves give much more fiscal headroom to the current administration to take fiscal initiatives and stimulate/subsidize investments and employment programs. Unemployment remains at record low level around 5.3%. Labor market is considered to be “hot” and work forces at all levels; both blue and whiter collar, are in high demand. There is currently a lack of skilled labor at all levels. ◉ Year-end projections: O О Annual GDP growth has been reduce again to 1.57%. Inflation year-end forecast at 5.42% Trade surplus in the external accounts at USD 18 billion; © Wärtsilä Foreign direct investment at USD 58.8 billion and current account deficit of USD 56.1 billion. The SELIC interest rate is expected to end 2012 at 7.50% p.a. and the foreign exchange rate BRL 2.00 per USD The net public sector debt is expected to end 2012 at 35.25% of GDP. For 2013 the main estimates are; GDP growth at 4.0% and IPCA inflation at 5.44%, current account deficit at USD 68.16 billion, foreign direct investments at USD 60 billion and trade surplus at USD 14.57 billion. WÄRTSILÄ

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