Strong Start For Brazil’S Industry In 2025 Masks Underlying Weakness

(MENAFN- The Rio Times) Brazil's industrial sector posted a 4.7% revenue increase in the first quarter of 2025 compared to the previous quarter, according to the National Confederation of Industry. Year-on-year, the sector saw a 10.8% jump.

This growth stands out after a 2.4% drop in March revenue, which reversed some earlier gains. The Brazilian Institute of Geography and Statistics reported a 1.2% rise in industrial output for March, the sharpest monthly increase since June 2024.

Sixteen of 25 industrial segments expanded, led by pharmaceuticals, chemicals, petroleum products, and automotive manufacturing. However, nine sectors contracted, including chemicals and food products.

Despite these gains, the recovery remains fragile. Industrial production now sits 2.8% above pre-pandemic levels, but still lags 14.4% behind its 2011 peak.

Over the past five months, output declined 1.3%, and analysts have trimmed 2025 growth forecasts to 1.6%, down from 3.1% in 2024. High interest rates, currently at 14.25%, continue to weigh on investment and demand.



The central bank plans further rate hikes to fight inflation , which is expected to rise in the short term before easing later in the year. Wages in manufacturing reached a record R$3,284 per month in February 2025, up from R$3,269 in January.
Brazil's Industrial Sector Shows Resilience Amid Wage Gains
The average salary for Brazilian workers stands at R$3,294 per month, a 4.7% increase over 2024. Yet, wage growth only slightly outpaces inflation, and regional disparities persist.

The Southeast region leads in pay due to its industrial concentration, while the North and Northeast lag behind. Employment in industry remained stable in March, following modest growth in the first two months of the year.

The sector created 181,800 formal jobs in 2024, but job creation has slowed. Installed capacity utilization held steady at 78.9%, slightly below last year's level, signaling cautious investment.

Structural challenges persist. Domestic inefficiencies, high borrowing costs, and weaker global demand limit further expansion. While the sector shows resilience, the outlook remains uncertain as Brazil 's economy adjusts to tighter monetary policy and global headwinds.

The story behind the numbers reveals a sector growing, but on unsteady ground, with risks looming as the year progresses.

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