The mystery of industrial stagnation explained

BRAZIL ECONOMICS - Report 10 Nov 2025 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

Despite economic growth in recent years somewhat above the historical average, Brazil’s industrial sector continues to show low dynamism. Our interpretation is that one of the main obstacles to the sector’s growth is, paradoxically, the very expansionary economic policy, which stimulates demand in a context of a tight labor market, thereby compressing profit margins. Unit labor costs have risen both because of higher wages and declining productivity. Meanwhile, the currency has not depreciated proportionally, limiting the pass-through of costs to domestic prices. In this environment, industrial production remains constrained by rising costs, and a significant share of the increase in domestic demand for manufactured goods ends up being met through higher imports.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2025 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.