This document provides an overview of Latin America's economy, including key metrics like GDP growth rates and currency exchange rates. It notes that Latin America's GDP growth averaged 4.5% from 2012-2016, driven by commodities exports which account for around 50% of the region's exports. However, the region faces challenges from potential European economic issues, dependence on commodity prices and China's economy, as well as domestic issues like inequality and education levels. A slowdown in US or European growth could significantly impact Latin America's growth.

1. GLOBAL CITIES INITIATIVE
São Paulo, Brazil
November 2012
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GLOBAL CITIES INITIATIVE
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3. Agenda
Page
Latin America 1
Brazil economy 6
São Paulo: State and metropolitan region 14
GLOBAL CITIES INITIATIVE
1

4. Latin America – GDP overview
Real GDP growth (%) Foreign Exchange – Ccy/USD (eop)
GDP growth avg. ’06-’11 2011 2012E 2013E
GDP growth avg. ’12E-’16E
Argentina 4.13 4.80 5.70
Average ’12E-’16E = 4.5%
Brazil 1.67 2.02 1.95
Chile 483 490 500
7.0%
5.8%
3.9%
4.8%
4.4%
4.8%
4.2%
4.6%
1.4%
3.7%
6.8%
3.7%
0.5%
2.2%
0.4%
1.2%
Colombia 1,847 1,775 1,775
Mexico 12.44 12.50 11.80
2011 GDP¹ 177 249 333 2,474 1,154 448 15,094 13,104
(US$bn):
Population as Peru 2.75 2.57 2.55
29.4 17.3 44.7 196.7 114.8 40.8 311.6 332.4
of 2011(mm)
Sources: EIU (as of May 2012); Individual country central banks; World Bank Source: J.P. Morgan estimates
1 Represents nominal GDP
Emerging markets real GDP growth by region (%yoy) Current Sovereign ratings
Latin America Emerging Asia Emerging Europe Moody's S&P
10.4 B3 / Stable B / Negative
9.7 9.1
8.3 8.7
7.1 7.3 6.8 6.8 6.9
6.4 6.1 5.7 5.8 6.1 6.2 Baa2 / Stable BBB / Positive
5.4 4.9
4.5 4.4 4.2 4.5 4.0
2.9 2.7
Aa3 / Positive A+ / Stable
Baa3 / Stable BBB- / Stable
LATIN AMERICA
-2.2
Baa1 / Stable BBB / Stable
-5.5
Baa3 / Positive BBB / Positive
2004 2005 2006 2007 2008 2009 2010 2011 2012E
Source: J.P. Morgan Source: Bloomberg
2

5. Country risk perception across Latin American countries have returned to pre-
crisis levels, still with apparent differences across countries
Country risk evolution (EMBIG index, spread over US treasuries)
1
Latin America Argentina Brazil Colombia Chile Mexico Peru CA&C
2,000
1,800
1,600
1,400
1,200 1,165
1,000
800
600
400 375
367
168
200 149
130
124
120
0
01/03/07 11/04/07 09/04/08 07/06/09 05/07/10 03/08/11 01/07/12 11/07/12
Latin America Argentina Brazil Colombia Chile Mexico Peru CA&C 1
Current 367 1,165 149 120 130 168 124 375
1 year ago 440 807 214 181 156 205 190 386
2 years ago 336 529 171 143 121 158 146 279
LATIN AMERICA
3 years ago 373 738 226 220 137 220 192 379
4 years ago 701 1,711 441 504 359 422 441 608
5 years ago 248 385 199 185 124 146 163 216
Source: Bloomberg, as of November 07, 2012
1 Central America and Caribbean, based on CACI index
3

6. China is now the top export destination for Brazil, Chile and Peru, but the trade links
between China and many other Latin American countries are also growing fast
EM countries with the highest exposure to commodities (% of total exports unless stated otherwise)
Impact of 20% decline in commodities1
Total Commodities by type: % of total exports to: on current account
commodities Oil Metals Agriculture US EU China (US$ billion) (% GDP)
Argentina2 61.0 -3.5 5.2 55.8 5.0 17.0 7.7 -9.4 -2.3
Brazil 58.9 10.4 21.5 27.0 10.9 19.4 17.8 -25.0 -1.0
Chile3 75.8 -14.5 65.1 10.7 10.9 17.5 22.7 -10.5 -4.2
Colombia 72.4 58.4 4.7 9.3 37.8 15.4 5.9 -6.3 -1.7
Ecuador 78.4 53.7 0.5 23.0 43.8 16.2 1.0 -2.5 -4.0
Mexico 16.3 12.4 1.0 3.0 78.5 5.8 1.7 -2.0 -0.2
Peru 89.7 10.3 62.7 16.8 13.3 18.6 15.0 -4.4 -2.1
Uruguay 63.7 1.2 2.5 58.1 3.7 11.3 7.8 -1.0 -2.2
Venezuela 97.6 95.1 2.3 0.1 38.0 6.4 13.3 -18.0 -6.0
Latin America 50.9 17.8 14.3 18.2 35.3 15.4 10.5 -9.2 -1.2
¹Assuming a drop in ALL commodity prices at once.
²In Argentina, oil exports are net of imports, that’s why it appears as a negative number.
³In Chile, the agriculture category includes cellulose and oil category is net of imports.
Source: J.P. Morgan
Latin America’s terms of trade are heavily driven by commodity prices, which in turn are driven by China’s growth cycle
Exports to China as a share of total exports Latin America: Export growth and commodity prices
22.7 60% Export growth %oya
%oya
Commodity prices (JPMCCI prices)
2005 2012
17.8 40%
15
20%
10.9 11.4
9.8 0%
7.9 7.7 7.8
5.9 5.8
-20%
3.5
2.2
LATIN AMERICA
1.7 1.9
0.5 1.1 -40%
0.1
Mexico Ecuador Colombia Argentina Uruguay Venezuela Peru Brazil Chile -60%
2000 2002 2004 2006 2008 2010 2012
Source: J.P. Morgan Source: J.P. Morgan
4

7. Challenges
Challenges Correlation between US and EURO growth with LATAM’s
1 Demographic and internal issues Impulse response of Emerging Markets growth to a
US/EMU real GDP growth shock over four quarters
Low level of education in the region
Response to 1% change in US and EURO area GDP (% impact level of GDP):
High inequality of income in most of the nations Model estimated 1Q00 to 2Q11
Fourth Quarter
Lack of homegrown technological innovation Relative to
Region / Country First Quarter Cumulative US/Euro area
Emerging Asia 0.9 1.4 0.6
External economic issues China 0.7 1.0 0.4
2
India 0.3 0.6 0.3
Contagion from Europe: Large foreign claims of Korea 1.4 2.4 1.0
European banks suggest risk of capital outflows Taiwan 2.6 4.0 1.6
Latin America 1.1 2.9 1.2
Potential impact of European bank deleveraging on
Brazil 1.3 2.6 1.1
bank credit in Latin America Mexico 1.1 4.0 1.6
Emerging EM 1.0 3.4 1.4
Fiscal balances are seeing deterioration in several
Russia 1.2 3.8 1.5
Latin American countries this year due to the growth
Turkey 1.4 4.9 2.0
slowdown
Emerging 0.9 2.1 0.9
Source: J.P. Morgan
3 Trade issues: Impulse response of Emerging Markets growth to a
EURO area real GDP growth shock over four quarters
Needs to take continued steps to integrate as a region
Response to 1% change in EURO area GDP (% impact level of GDP):
Terms of trade are heavily driven by commodity prices, Model estimated 1Q00 to 2Q11
which in turn are driven by China’s growth cycle Region / Country After 1 quarter After 4 quarter
Latin America 1.2 0.9
China’s influence in driving Latin America’s growth has Brazil 1.5 1.0
increased sharply since 2008, particularly for Brazil. Mexico 1.3 1.3
LATIN AMERICA
Emerging 0.7 0.6
Source: J.P. Morgan
A 1%-pt decline in US/Euro area growth has translated into a 1.2%-pt drop in Latin America’s growth since 2000, while a
1% growth in US/Euro real GDP generated a response of 0.9% in Latam growth after 4 quarters
5

8. Agenda
Page
Latin America 1
Brazil economy 6
São Paulo: State and metropolitan region 14
GLOBAL CITIES INITIATIVE
6

9. Brazil is the leading economy in the region, having experienced a positive
transformation on its macroeconomics indicators
Brazil has favorable macroeconomic fundamentals such as strong economic growth, increasing income per capita...
GDP growth, interest rates and inflation Components of GDP GDP per capita
Net exports Consumption In USD In BLR
Real GDP growth (%) Selic (%) - EoP 25,000
Gov’t spending Fixed investment
17.8% 18.0%
4,800 Inventory change
13.3% 13.8%
1 .3%
1 12.2% 1 .0%
1 2.0%
1 %
5.1 7.5% 4,300
5.7% 7.5% 20,000
5.7% 5.1% 18.0%
3.2% 4.0% 2.8% 1 .4%
-0.2% 3,800
12,917
3,300
10,814
2004 2005 2006 2007 2008 2009 2010 201 201
1 2E 15,000
21.0%
2,800
8,706
8,348
7,283
2,300 10,000
5,867
Inflation rate (%) - IPCA
4,812
1,800
3,655
3,186
3,097
2,861
7.6%
5.7% 5.9% 5.9% 6.5% 5.2% 1,300 61.0% 5,000
4.5% 4.3%
3.1% 800
300 0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2004 2005 2006 2007 2008 2009 2010 201 201
1 2E
(200) (1.3)%
Source: J.P. Morgan and IBGE as of February 2012 Source: IBGE (Brazilian Statistics and Geography Institute), Source: IMF as of January 2012
J.P. Morgan Asset Management
… low unemployment rate and historical low risk premium
Unemployment rate Brazil’s EMBIG – spread over US Treasuries¹
12%
1%
1 3,000 Presidential
elections
10%
2,400
9% Real
devaluation
8% 1,800
Argentine
7% devaluation
BRAZIL ECONOMY
1,200
6% 5.3% Credit crisis
5% 600
4% 195
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Aug-12
Jan-99 Sep-01 May-04 Feb-07 Oct-09 Jul-12
7
Source: IBGE and J.P. Morgan economic research Source: J.P. Morgan
¹Also called “Risco Brasil”

10. Brazil positive socio-demographic characteristics create ideal conditions for solid
economic growth
Breakdown of Brazil’s population by socioeconomic Evolution of poverty levels in Brazil (% of total
class (mm individuals and % population) population)
Class A/B Class C Class D/E 28.1%
25.4% Poverty level almost halved
22.8%
47mm 56mm
19.3% 18.3%
96mm (24%) (29%)
16.0% 15.3%
(55%)
106mm 113mm
+40mm (54%) (56%)
66mm
(37%) 13mm 44mm 31mm
(8%) (22%) (15%)
2003 2011 2014E 2003 2004 2005 2006 2007 2008 2009
Source: IBGE as of February 2012 Source: IBGE as of February 2012
Note: Socioeconomic classes defined by household monthly income thresholds; A/B exceeding Note: Poverty level line is defined as a monthly income lower than US$35 per capita
US$2,627, C between US$610 and US$2,627, D between US$439 and US$610, and E under US$439
Evolution of population distribution by age (millions of Brazil has a young and fast-growing population
people)
Age Age
Men Women Men Women
Total population: 197mm Total population: 270mm
8… 80+ Growth: 0.9% Growth: 0.3%
% under 35 years
7… 70-79
6… 60-69 % abo ve 65 years
5… 50-59
4… 40-49 60%
3… 30-39 40%
2… 20-29
1… 10-19 19%
BRAZIL ECONOMY
7%
0-9 0-9
20 15 10 5 0 5 10 15 20 20 15 10 5 0 5 10 15 20
2012 2050 Brazil France, Germany, Italy and UK
Source: IBGE, projection of population in Brazil Source: IBGE as of March 2012
8

11. Brazil can be considered a relatively closed economy, with exports and imports
representing only 11.9% and 12.6% of GDP respectively.
In 2011 Brazil exports reached US$256 billion, a 26.5% increase from the previous year
Brazilian and Latin American exports Brazil’s main exports
% of nominal GDP, USD terms, By region/country and product, USD terms, YTD as of Aug.
2011 2012
Capital goods Consumption goods Commodities
Brazil 12%
35% 31%
Colombia 17% 30%
Argentina 19% 25% 20% 19%
20%
Peru 26%
15% 12%
Venezuela 29% 10%
5% 4%
Mexico 30% 5%
0%
Chile 33%
Asia EU LatAm USA Africa Middel East
Source: (Top) J.P. Morgan, IBGE (Brazilian Statistics and Geography Institute), Central Bank of Brazil, J.P. Morgan Asset Management. (Bottom left) Central Bank of Brazil, Economy
Ministry of Argentina, Central Bank of Venezuela, Bank of Mexico, Central Bank of Chile, World Bank, IBGE, DANE (National Administrative Department of Statistics of Colombia),
J.P. Morgan, Central Reserve Bank of Peru, INEGI (National Institute of Statistics and Geography of Mexico), J.P. Morgan Asset Management. (Bottom right) MDIC(Ministry of
Development, Industry, and External Commerce), J.P. Morgan Asset Management. Data reflect most recently available as of 9/30/12
Main Brazilian Exports (% of total exports) Destination of Brazilian Exports (% of total exports) Top 10 Export Companies (% of total exports)
Rank Products 2011% Products YTD 1H12% Rank Country 2011% Country YTD 1H12% Company 2011% Company YTD 1H12%
1 Iron Ore 16.3% Iron Ore 12.7% 1 China 17.3% China 18.1% Vale 13.5% Vale 11.9%
2 Soy 8.6% Soy 10.2% 2 U.S 10.1% U.S 11.7% Petrobras 9.0% Petrobras 11.4%
3 Crude Oil 8.4% Crude Oil 8.9% 3 Argentina 8.9% Argentina 7.5% Bunge Alimentos 2.6% Bunge Alimentos 3.5%
4 Cane Sugar 4.5% Poultry 2.8% 4 Netherlands 5.3% Netherlands 6.0% BRFoods 1.9% Cargill 2.2%
5 Coffee 3.1% Cane Sugar 2.7% 5 Japan 3.7% Germany 3.1% Samarco 1.7% Embraer 2.2%
6 Poultry 2.8% Coffee 2.4% 6 Germany 3.5% Japan 3.0% Embraer 1.6% ADM do Brasil 2.1%
BRAZIL ECONOMY
7 Pulp 2.0% Fuel Oil 2.3% 7 Italy 2.1% Italy 2.1% Cargill 1.6% Louis Dreyfus 1.8%
8 Steel 1.8% Pulp 2.0% 8 Chile 2.1% India 2.0% ADM do Brasil 1.3% Samarco 1.7%
9 Autos 1.7% Steel and Iron 1.9% 9 U.K 2.0% Venezuela 2.0% Braskem 1.1% Braskem 1.4%
10 Beef 1.6% Airplanes 1.7% 10 Spain 1.8% Chile 1.9% Louis Dreyfus 1.0% BRFoods 1.3%
Others 49.1% Others 52.3% Others 43.2% Others 42.6% Other 64.7% Other 60.5%
Source: MDIC.
9

12. Government Programs
PAC – Program for Growth Acceleration Minha Casa, Minha Vida (MCMV)
Aims to accelerate the country’s economic growth through It is focused on lower income families in order to facilitate
investments in infrastructure (housing, transportation, utilities access to housing by granting mortgages subsidies
and sanitation)
The resources are subsidized by the Union and FGTS
PAC 1: Government forecasted more than US$ 328bn in
investments between 2007 and 2010
Already reached its goal contracting over 1 million units by
PAC 2: Launched in March 2010 with investments the end of 2010
estimations of around US$ 477bn from 2011 to 2014
PAC 1 Investments (US$ billion) – 2007 to 2010 Minha Casa, Minha Vida (MCMV) breakdown
Sector Total Estimated Total Concluded % Income Segment Proposed Units Contracted Units % of total
Up to 3 minimum wage 400,000 574,874 57.2
Logistics 213.9 111.7 52.2
From 3 to 6 minimum wage 400,000 284,079 28.3
Housing and Sewage 114.3 110.2 96.4 From 6 to 10 minimum wage 200,000 146,075 14.5
Total 328.2 221.9 67.5 Total 1,000,000 1,005,028 100.0
Source: Federal Government Source: Caixa Econômica Federal
Bolsa Familia Fome Zero
“Bolsa Família” is a program of direct income transfer to Aims to ensure the right of having adequate food to people
families in poverty serving more than 13mm households with limited food access.
In June 2011, President Dilma Rousseff announced the Four main drivers: Food access, strengthening on family
expansion of the program, as part of the “Brasil sem Miséria” agriculture, income generation and social control
Aims to remove another 16.2mm people living in extreme Focused in the Northeast region (40.2% of the country’s
BRAZIL ECONOMY
poverty situation poors), mostly in the rural area
Source: Ministry of the Social Development
10 Source: Ministry of the Social Development

13. Main events and Investments
Large Events (Fifa World Cup and Olympic Games) Pre-salt Investments
Host Cities and Total investments (USD bn) Description
It is a new development stage for the oil industry
in Brazil affecting strongly the investments’
dynamic in the sector
Fortaleza
Manaus
Natal
It is located in the South and Southeast regions,
encompassing Campos, Santos and Espirito
Recife
Santos basins.
Cuiabá
Salvador Out of the 149,000 km2, 41,000 km2 have
Brasília
been already granted, of which 38,000 km²
Host cities Belo Horizonte belong to Petrobras
Rio de Janeiro Pre-salt total investments estimated in US$
Planned Investments in US$ bn
43.7bn in the next four years
São Paulo
6.3
Curitiba
24.9
18.6 Petrobras has already assumed that the pre-
Porto Alegre
salt can easily double their current level of
FIFA World Cup
2014
Olympics
2016
Total
Investments
proved reserves
World Cup and Olympic Games planned infrastructure Investments Petrobras Oil Production
(USD bn)
Thousands of Barrels/day
4,200
World Cup Planned Investments (US$ bn) Olympic Games Planned Investments (US$ bn)
Total 18.6
Investments
Hotels 0.9 Sector Public COJO* Total %
2,500
Health and Security 2.3
Accomodation 1,295.2 0.0 1,295.2 20.7
,855 1,971 2,004 2,022 2,000 ... ...
Energy and Telecom 1.9
1,584 1,778 1,792 1
Technology 202.9 35.8 238.7 3.8
BRAZIL ECONOMY
Total Civil Infrastructures 13.5
Sport Instalation 476.6 282.2 759.1 12.1
Ports and Airports 4.1
Urban Mobility 6.0 Tranport 3,730.0 0.0 3,730.0 59.6
Arenas 3.4 Security 235.9 0.0 235.9 3.8
2005 2006 2007 2008 2009 2010 2011 2012 2016F 2020F
0.0 5.0 10.0 15.0 20.0 Total 5,940.6 318.0 6,258.6 100.0
Source: Ministry of Finance and Ministry of Sports Source: Company fillings
*COJO: Rio 2016 Organization Committee 11

14. Brazil presents several bottlenecks that difficult its economic growth
Airports Education
Current installations are not enough to support the World Brazilian student spends 7.2 years at school which is not
Cup and Olympic events demand even enough to complete the basic education
In 1H2012, the government sold 51% of the airports of Average is below almost all Latin America countries
Guarulhos, Viracopos and Brasilia in an auction that brought Brazil spends US$2,098 per student per year on basic
US$ 12.2bn to the government education. The OECD average is US$7,870
Additional investments should reach US$ 3.7bn
In 2010, more than 18 million people were illiterate
Airport Investments (US$ MM)
City - State Airport Investment (in US$ mm) % of total 37.2%
Illiteracy Rates (2005-2010) – in % of total Population
São Paulo – SP Guarulhos 1,035.5 28.1%
Rio de Janeiro – RJ Galeão 449.4 12.2%
São Paulo SP Viracopos 438.5 11.9% 11.3% 10.4% 9.6% 9.3%
6.8% 6.6% 6.0% 5.4% 4.8%
Brasília - DF Pres. Juscelino Kubit. 432.4 11.7% 1.4% 1.1% 1.0% 0.4% 0.2%
Natal - RN São Gonçalo 291.2 7.9%
z.
a
a
a
ly
a
co
a
ru
na
g.
a
S
le
il
bi
Others - 1,036.8 28.1%
ri c
ivi
di
It a
az
ub
ne
si
U
Pe
ra
hi
i
hi
om
In
ex
l
us
Af
Bo
Br
C
C
Pa
Ve
C
M
R
ol
S.
Total - 3,683.8 100.0%
C
Source: Ministry of Sports and JP Morgan research team. Source: JP Morgan research team
Energy Logistics
JPM estimates that the country should invest US$ 15bn on New investment pipeline of concessions on toll roads, ports,
the sector every year in order to maintain the stability and urban mobility projects
Four main plants in construction totaling US$ 31.8bn in Large cities are very short handed in the subway grid
investments (Belo Monte, Santo Antonio, Teles Pires, Jirau) PPP with tax exemption project for three new subway
Supply vs Demand scenario in Brazil (in GW)
lines in São Paulo
95 88 90
84 86
85 Supply 77
80 Third round of federal road auctions (BR-040 and BR-116)
74
75 Demand 72 for 2H12
BRAZIL ECONOMY
66
63 Estimated capex for projects above is US$ 6.1bn
65 59
55
Expectation for the concession of four large ports (Prainha,
45 Suape, Manaus and Ilheus) totaling over US$ 2.1bn
2010
2011
2012e
2013e
2014e
2015e
2016e
2017e
2018e
2019e
2020e
Source: EPE (Brazilian Government Energy Research Company) 12 Source: JP Morgan research team

15. Growth potential is still limited by microeconomic challenges
Challenges
Diminished competitiveness due to high tax burden and bureaucracy costs
Lack of education: scarcity of well-skilled labor and low productivity limit potential growth
Logistics bottlenecks also limits potential growth
High inequality of income and poverty
Great dependence on commodities
Government higher expenditures don’t mean higher investments
Infrastructure investments totaled 2.1% of the total GDP in the period of 2001-2007. Much lower than the comparable Latam
countries and other Emerging countries
Most of the challenges are on the microeconomic front, affecting the supply-side % of GDP in Infrastructure
Selected competitiveness indicators (2012) Brazil: The most problematic factors in doing business (%) Investments in Infrastructure
Indicator Brazil Latam OECD
Tax Regulations 18.7
Days to start a new 16.5 Country (Period) % of GDP
119 54 12
business Inadequate Suply of infrastrucutre 17.5
15.2 Brazil (2001-2007) 2.1%
Years to close a Tax Rates 17.2
4 3 2
business 20.0
Inneficient government 11.1 Chile (1998-2001) 6.2%
Recovery rate from bureaucrecy 10.6
18 31 68 10.1
insolvent firm (%) Restrictive Labor Regulation 12.5 Colombia (1998-2001) 5.8%
Number of hours spent Inadequately educated Workforce 7.4
2,600 382 186 8.3
preparing taxes India (2006-2007) 5.6%
Corruption 6.0
6.2
Total Tax rate
BRAZIL ECONOMY
67 48 43 3.9
(% profit) Access to financing 3.0 2012 China (2000-2003) 7.3%
Labor tax and Foreign Currency Regulations 2.1 2011
41 15 24 2.3
contributions (% profit) Vietnam (1998-2003) 9.9%
Inflation 0.3
1.8
Cost to Export
2,275 1,546 1,085 Thailand (2000-2003) 15.4%
(US$ per container) 0.0 5.0 10.0 15.0 20.0
Source: World Economic Forum Source: World Economic Forum Source: World Bank
13

16. Agenda
Page
Latin America 1
Brazil economy 6
São Paulo: State and metropolitan region 14
GLOBAL CITIES INITIATIVE
14