 Well, good afternoon, ladies and gentlemen, thank you very much for joining us here today for our third issue briefing here at the World Economic Forum 2015 annual meeting. Welcome also to our viewers who are watching this live on our webcast platform at weforum.org. Just a brief explanation, this is an issue briefing, not a press conference. It's an innovation of this year's meeting. What we're doing is we're taking some of the finest brains from the Congress Centre upstairs here in Davos Clusters and I'm putting them out and getting them to share their wisdom and their insights and their experience on critical and pressing matters of the day. The theme of this issue briefing is the Economic Outlook for Latin America. I'm very delighted to be joined by Elen Goldfein, the Chief Economist of Itao Unibanco in Brazil. Elen is going to offer some remarks, his view, his outlook on the Latin American economy then of course will open the floor for questions. Elen? Well, we are now in a period very challenging for Latin America, both from external factors as well as domestic issues. From the external part, we had a very nice commodity cycle. It seems to be over, commodities are down. China is decelerating, which doesn't seem to somehow lead to higher commodities. It's probably going to add the best stabilized commodities. The global growth is not great. We're going to see some improvement in global growth this year, from last year especially because of the U.S. Probably not enough to bring Latin America back to very strong growth. We had a couple of years of deceleration. In some countries even more, in the case of Brazil we had four years of growth deceleration. In some countries are doing better, for example, Colombia, the growth last year was 4.7, but the rest of the region seems to be decelerating quite a bit. The domestic policies are somehow also to blame in some countries. We had policies in Argentina, in Venezuela, a little bit in Brazil, too, that do not lead to sustainable growth and in a downturn that's prevailing. Now there were also good policies and accumulation of reserves, accumulation of basically assets in the sense that debts are lower, smaller. So I don't think things are extremely challenging, they're just challenging. Some countries we expect them to recover. This is the case of Mexico. Mexico has been doing its homework with reforms and with the recovery of the U.S. we do believe that we're going to get a recovery in Mexico, too. In the case of Brazil we have signs of hope. We got a new finance minister, a new economic team, and that's a sign of change, that if everything works correctly and he has political support we're probably going to get some growth recovery starting next year. Thank you, Ile. Let's see if we have any questions. If I may, I'll ask one that we have received over social media this morning. It covers a topic and an issue which has become very popular here in Davos-Closters over the past few years at least, which is inclusiveness and inequality. We obviously had a report published by Oxfam earlier this week on the issue and also the forum itself. We published a discussion paper which is available on our website on looking at the levers available to policymakers for driving economic growth as well as social inclusion, delivering a social dividend with growth. But it's tricky, Latin America is a region which actually has had relative success in driving inclusiveness. And yet, as you mentioned, the outlook is less optimistic than it has been in the past. Ile, what are your views on the prospects for inclusiveness and do you think it is possible to achieve the holy grail of growth and social inclusion at the same time? It's amazing how Latin America was able to grow and to include millions and millions of people in the new middle class out of poverty. And that happened in the first 2000 to 2000 and I'll say up to 2012. We're talking about 10 to 12 years and that happened in almost all the countries in the region, including Brazil, Argentina, Uruguay, Peru, Chile, Colombia, almost all of them. Of course, it was facilitated by the community boom and the community boom basically brings home an income gain that if you are a minimally successful in distributing this income, in some countries it was done through social programs. In others, the distribution occurred through the labor market, wages went up, you got more people employed and that basically was the main driver of poverty reduction and social inclusion. Now the state now is still not the great, the level is still, even though we had improvements, you can still consider Latin America one of the regions with the worst income distribution, not the worst globally, but I will say one of the worst. Everybody has improved, but still you have some, which means that there's a lot to do. And the question now is how are you going to continue delivering social gains when there's no growth? So the question differently from the report is not only if you have growth and social inclusion at the same time, but can you have social inclusion where there's no growth? And this is the question now. Of course, policymakers are working to reestablish growth through several measures, several policies, some of them cyclical, some of them more structural, probably we hope they will be successful, but I'm not sure it's going to happen, for example, 2015, it may take a while and here is where we need to see if we at least can keep the gains of the past. Yeah, sure. So could you give your name for the benefit of our audience? I'm Fernando Nakagawa from the Brazilian Newswire. Do you agree with the forecast for the Brazilian economy this year with a flat GDP for this year? And regarding the fiscal situation, do you agree with the option to high the level of taxes in Brazil? Is it necessary to get more of the taxes in Brazil? The first question, if I agree with a flat growth forecast in Brazil, I don't know who's used this forecast of flat zero, but I would say that our forecast of 0.2 is not very far from zero growth, it's positive, it's better, but not much, much better. And I agree because it's a challenging year, it's a year of adjustments, it's a year of fiscal consolidation, it's a year where prices are being adjusted, relative prices, and here I'm talking about regulated prices, which means that the consumer needs will need to pay more. So it's not going to be an easy year and our forecast of 0.2% shows that. Oh, about the measures, in Brazil we just heard about the new measures to establish the fiscal numbers, which was probably a deficit last year in the primary number, and probably we are now heading toward a target which is positive of 1.2% of GDP, this is the new target of the new economic team, and part of the measures were in the side of the spending, but part of the measures are on the revenue side, which is the nature of the questions, if I agree with the measures on tax, I think there's no, unfortunately there's no other option. The alternative of not doing anything or not raising taxes probably will mean a deficit, and a new deficit will probably mean deterioration of the conditions in Brazil, both fiscal and then rating agencies, and that will probably lead to a performance which is quite bad. So given the alternatives, I do agree, it's never a good, nobody likes to pay taxes, nobody likes to see taxes increase, taxes are not good for growth, but they are the best alternative now to establish confidence, establish investment, and then generate growth. Any other questions? Let's just cast, whilst we have you here, and let's just cast it a bit wider, we talked about Latin America, of course, you mentioned Mexico as a promising bright spot, are there any other economies or sectors that you see doing better in 2015? I'm thinking perhaps some sectors could actually benefit from the restricting, shaping of the economy, post slowdown in China and rebalancing in China. Well, it looks to me that the manufacturing sector that suffered quite a bit in the last 15 years, because the commodity boom led to the so-called Dutch disease, which is basically the appreciation of the currency, which made manufacturing, traditional industry much less competitive. The current status where we probably were seeing some deceleration commodity is going to the other side, we are now seeing exchange rates moving in the, going to the weaker side, and that makes some traditional industries more profitable, and you're probably going to see industry in Brazil, in Mexico, and other, starting to regain access to traditional markets, Europe, the US. As you probably know, China has replaced the US and Europe as the main trade partner of Latin America, and that probably will revert a little bit going forward. In countries, we were quite optimistic about Colombia, Colombia was one of the stars of the region, policies very well established, growth continued to be strong, even though we had China decelerations to have strong growth. Unfortunately, Colombia exports quite a bit of oil and energy, and since the oil fell quite a bit last year, I now am not so optimistic about Colombia anymore. I think for next year, we're probably going to see some deceleration, and they will have to face a more difficult period with oil prices around where they are. Okay, let's take both questions and see if we can cover both of them in two, in the next few minutes. Sir, just give your name in and pass the microphone and we'll do both together. My name is Alvaro Villalobos, I work for AFP. I'd like to know what is your outlook for Chile? It's again to account that one of the major clients for copper, which is China, is now growing much less. Okay, so Chile outlook, and yeah, madam? I'm Marta Beck, I work for Global in Brazil. I would like to ask you about the impact that you think that the fall in oil prices is going to have in the Brazilian economy. Okay, so Brazil, Chile first, your choice, Helene? Yeah, let's start with Chile, the order it was asked. So, on Chile, Chile has the rest of the region is suffering from commodity decline. In the case of Chile, we're talking about copper, which is one of the reasons, not all the reasons, but one of the reasons why Chile has decelerated quite a bit this year. We are expecting only a moderate recovery next year, and the reason is the investment in the mineral sector in copper will probably be lower, and with lower investment, you're probably not going to get a strong recovery. On the domestic side, there's quite a bit of debate in Chile about the reforms, the changes of the new government. Sometimes the reforms are such that you introduce some debate that made the country with some uncertainty in the transition, and that slows down the economy. Even though later you may actually benefit from the reforms, we don't know yet because they are not really complete. The tax reform is there, but some of the others we still don't know, and that brings uncertainty. So, from the copper side, including domestic issues, we are seeing the Chilean economy recovering, but only very, very slight. On the question on Brazil, the question, can you... It's the impact of oil. Oh, the impact of oil in Brazil. Here we have to separate between the short term and the medium and long term. In the short term, when oil goes down, everybody likes, the consumer likes. You pay less for your gasoline, you can drive for your car, you can do things with more, you have more money. So, in the short term, that benefits consumers all around the world, including in Brazil. So, that's a positive in the short run. People tend to be happy and growth to recover, and that's the case also in Brazil. In Brazil also, we have another impact in the short run that makes life easier, which is prices go down, which means that the main oil company, Petrobras, will actually get some cash flow because some of the oil, they get the import from abroad, and they're going to import these at lower prices and sell it domestically at a higher price, which making some cash. So, in the short run, I will say consumers are happy because gasoline prices are lower. In the case of Brazil, you do get some cash for the main oil company. Now, when you look at the medium term, it's a different story. Because in the medium term, Brazil is a supplier of oil. There has been quite a bit of discoveries in the deep sea, the so-called pre-salt. The lower the price of the oil, the less value you have on these discoveries and the oil, which means that whatever is good in the short run, given the discoveries and what you were supposed to become a strong export, it probably will mean less value now. So, good in the short run, not so good here for Brazil in the medium run because of the pre-salt. Okay. We have a few minutes left. I may just chance my arm with a question of my own. Sure. Sir, if you don't mind. Our global competitiveness report, which comes out every year around September, ranked three problems foremost with Brazil this year. This is a question on Brazil. It's about the future institutions and macroeconomic policy. And yet, the bright spark for our economists, our own team, was the clusters of high-tech innovation, which they saw as a real promise for the Brazilian economy. Can you give us your thoughts on innovation? Because innovation is obviously so important. It's obviously a theme of the meeting as well. Do you see Brazil as having an ability to grow its innovation and its high-technology sector? Yes, I can see that. I don't believe right now Brazil is in the leading edge in terms of innovation and technology. There's always bright spots, and you can see the potential. But not yet. When you measure innovation by the number of registrations of innovations that still are below international numbers. But I see potential from both the scale of the country. It's a large country. You have a lot of entrepreneurs, new people coming in, quite a bit of money for R&D. So you can get there. But you do need to evolve in one of the inputs for innovation, which is education. Without education, without the brains, you'll still have innovation from the elite. But you do need a large scale innovators, people with high skills. And this has yet to be achieved in Brazil. Okay, thank you. And very lastly, I promise, your advice and your request for the region's central bankers in 2015? Well, they are a very different bunch. There are central bankers that need to be careful about inflation. There are other central bankers that should be careful about growth, growth slowdown. Yet others have to be more careful about the US interest rates increase over the next few months. The ones that have to be watching closely the US is Mexico. The one that has to be looking more carefully about inflation is Brazil, where we're probably going to have an inflation above the upper limit of the target. And the rest of the countries, Chile, Peru, even Colombia, should take care about the growth of deceleration and lower interest rates. Thank you very much indeed. Thank you, it was a pleasure. Thank you all for joining us and thank you also to our audience watching us live online. There will be further issue briefings and press conferences tomorrow. This is our last one for today, so I will close now. I bid you all a good evening. Thank you very much. Thank you.