Brazilian Manufacturing: Trends and Developments

Over the last decade, Brazilian manufacturing businesses contributed around 17% to the country’s GDP and accounted for a similar portion of the domestic workforce. Manufacturers’ revenues grew along with the overall economy and recorded a compound annual growth rate of 11% over 2002-2012.

All manufacturing sectors grew strongly, with transport equipment recording the strongest expansion

Source: Euromonitor International

The sectors which contributed the most to growth were intermediate goods, food, beverages and tobacco and transport equipment. The latter expanded by more than threefold over the review period.

Nearly 8% of manufacturer output was exported in 2012, a tad above the 2002 level. The rest was sold to domestic businesses and Brazilian households.

Manufacturers’ Customer Breakdown 2012

Source: Euromonitor International

Among Brazilian manufacturers, around one fifth of operating expenses was accounted for by labour costs in 2012. The remainder were B2B expenses, led by spending on intermediate goods, primary materials and energy.

Throughout the review period, 13% of manufacturers’ B2B demand was covered by imports. Brazilian industries were highly dependent on the foreign supply of hi-tech goods, machinery and energy materials.

Manufacturers’ Operating Expenses 2012

Source: Euromonitor International

In the coming years, manufacturers within the intermediate goods sector are expected to achieve the strongest revenue growth. Particularly strong expansion is forecast for the basic metals category, which is projected to grow at 11% per annum over the next five years. Preparatory construction activities for the 2014 World Cup and 2016 Olympic Games, the growing middle-class and rapid urbanisation are all factors fuelling the construction industry, with domestic metal providers in a position to benefit from this.