Weak investment base to mitigate comparative decline in 2025
The impact of macroeconomic uncertainties on private investments could be mitigated by the weak comparison base from recent years and the boost from some segments of the economy, according to industry organizations interviewed by Valor.
In the electrical and electronic industry, investments are expected to remain stable at 1.7% of the sector’s revenue, amounting to approximately R$4.2 billion. This level aligns with recent years, seen as the minimum necessary to keep factories updated, says Humberto Barbato, president of ABINEE (Brazilian Electrical and Electronics Industry Association).
“Since a large portion of electronic equipment is launched simultaneously worldwide, plants in Brazil will not launch a product at an earlier stage. Therefore this investment is the minimum required to ensure renewal. Until 2015, the level was higher, with investments at 2.5% of revenue; since then, this performance has not recurred,” Mr. Barbato noted.
The machinery and equipment sector anticipates an increase in investments driven by the downturn of previous years. According to a survey carried out by ABIMAQ (Brazilian Association of Machinery and Equipment Industry) between December 2024 and January this year, companies plan to invest R$8.35 billion in 2025, a rise of 4.04% compared to last year’s figures.
“The sector has faced three consecutive years of decline. In 2024, there was an expectation of growth. However, due to a dramatic performance shift, especially in agribusiness-related sectors, many investments were postponed. Therefore, the projected growth this year is linked to a low comparison base,” explained Cristina Zanella, director of competitiveness, economy, and statistics at ABIMAQ.
The machinery and equipment sector ended 2024 with an 8.6% decline in total revenue compared to 2023, reaching R$270.8 billion. In 2023, manufacturers recorded an 11% drop in revenue compared to the previous year. Nonetheless, the forecast for 2025 points to a 3.7% increase.
She points out that projections vary by segment: investments in the agricultural and infrastructure sectors have a positive outlook for this year, while those related to the manufacturing industry face a more challenging scenario and may be revised.
Exports could enhance the sector’s activity level. In 2024, exports amounted to $13.1 billion, a 5.5% decline compared to the previous year. Still, this result is the second-best for manufacturers, only behind 2023’s performance when exports reached $13.9 billion.
Rafael Cagnin, an economist at IEDI (Institute for Industrial Development Studies), also highlights infrastructure concessions as a potential driver for investments. “Some projects have not yet translated into demand, and these are contracts that are already in place,” he said.
In the transportation and logistics sector alone, private concessionaires are expected to invest R$41.3 billion in 2025, according to calculations by ABDIB (Brazilian Association of Infrastructure and Heavy Industry).
A favorable outlook for the agricultural harvest is another potential stimulus, Mr. Cagnin noted, although he pointed out that the sector adds little value to products, limiting the positive impact. “This harvest could bring more dynamism to the production system, but the country has a large food industry and other sectors, such as biofuels, that could benefit,” he noted.
According to the economist, another factor that could mitigate the negative impacts of macroeconomic uncertainty is government incentives for domestic consumption, such as the release of the Workers’ Severance Fund (FGTS) withdrawals and new rules for payroll loans. “That will not necessarily turn into consumption, but tends to aid households’ finances, creating room for increasing consumption.”
Fernando Valente Pimentel, managing director of the Brazilian Textile and Apparel Industry Association (ABIT), also highlights government measures but notes increased pessimism in the sector. A recent survey revealed that 44% of member companies intend to maintain investment levels, while 36% plan moderate increases. The outlook is more pessimistic than in the survey conducted in November. “There is a loss of confidence, and current interest rates are very high. People are cautious to preserve cash,” he explained.
According to Mr. Pimentel, the scenario is not “catastrophic” despite macroeconomic challenges. “Employment levels should remain balanced, although income is being eroded by food inflation, which means GDP growth will be slower,” he pointed out.
For the Brazilian Footwear Industry Association (ABICALÇADOS), the projection for 2025 is a 2% increase in production and a 6.2% rise in investments—from R$1.6 billion in 2024 to R$1.7 billion this year. However, the scenario depends on macroeconomic factors like food inflation, said the association’s president, Haroldo Ferreira. “Households prioritize food, followed by other semi-durable consumer items like footwear,” he noted.
He assesses that, with the tariffs imposed by the United States on Chinese imports, Brazilian products could gain market share in the U.S. market this year, benefiting the sector. However, domestic consumption accounts for about 85% of domestic production, meaning dependence on the Brazilian economy remains high, he added.
Despite some factors that mitigate the impact of uncertainties, the general perception in the productive sector is that turbulence, both domestic and international, poses risks to companies’ plans. “The scenario creates conditions for delaying investment processes, prompting companies to postpone, waiting for a more reliable horizon,” Mr. Cagnin pointed out.
The IEDI economist highlights that the capital goods and durable consumer goods industries, which boosted industrial investments in 2024, heavily rely on credit and attractive interest rates for investment and are therefore likely to struggle more.