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Brazil’s manufacturing production: loss of competitiveness

28 noviembre, 2024
English
Produção industrial do Brasil: perda de competitividade

Brazil‘s manufacturing production has lost competitiveness in recent years, with declines in four of the last five years.

In 2023, manufacturing output in this country contracted by 1.3%, following a 0.5% decline in 2022. 

Brazil’s manufacturing production

According to the Brazilian government, the negative performance was mainly due to a drop in the manufacture of chemical products, machinery and equipment, metallurgical products and automotive industry products. 

Manufacturing accounted for 13.3% of Brazil’s GDP in 2023, implying an expansion of 2.0% compared to 2022.

Among other products, Brazil produces automobiles, aircraft, household appliances, auto parts, steel, aluminum, iron, food and beverages.

Below is the trend of Brazil’s manufacturing production growth, in real terms:

  • 2019: -0.4%.
  • 2020: -4.7%.
  • 2021: 3.8%.
  • 2022: -0.5%.
  • 2023: -1.3%.

Industrial incentives

On January 22, 2024, the Brazilian Federal Government launched the Nova Indústria Brasil program, with the objective of strengthening the national industry until 2033. This program uses several traditional public policy tools, such as subsidies, loans with reduced interest rates and an increase in federal investments. In addition, tax incentives and special funds are incorporated to promote certain key sectors of the economy.

The program has six main objectives. These are related to the expansion of industrial autonomy, the ecological transition and the modernization of the Brazilian industrial sector. Among the beneficiary sectors are agribusiness, health, urban infrastructure, information technology, bioeconomy and defense.

A significant portion of the resources will come from Brazilian financial institutions. The National Bank for Economic and Social Development (BNDES), the Financiadora de Estudos e Projetos (Finep) and the Brazilian Industrial Research and Innovation Company (Embrapii) will be responsible for managing the necessary financing.

Brazil’s industrial sector encompasses several subsectors, such as mining, oil and gas, manufacturing, construction and utilities. In 2023, this sector experienced an expansion of 1.6% compared to 2022, reflecting moderate growth.

However, as of December 31, 2023, the industrial sector accounted for 22.3% of Brazil’s Gross Domestic Product (GDP). This figure shows a slight decrease from the 22.8% reached in 2022, indicating a 2.4% reduction in its share within the national economy.

 

 

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