Brazilian machinery sector continues revenue decline, 2023 estimates revised downwards

The total revenue of the machinery sector in Brazil maintained its declining trend in July, a pattern that began in mid-2022 and has not shown any signs of recovery this year. With a lackluster start to the second half of the year, manufacturers are likely to revise their estimates downwards for 2023. The current expectation is a decline of 3.4%. This would mark the second consecutive year of reduced revenue for manufacturers, as 2022 ended with a 5.9% decrease in revenue compared to 2021.

According to figures released on Wednesday (30) by Abimaq, the entity representing manufacturers, the sector’s accumulated revenue for the first seven months of 2023 was R$166.2 billion, a decrease of 9.2% compared to the same period last year.

In July, the total revenue reached R$23.7 billion, marking a 10.5% decline compared to the previous year and a 4.6% drop compared to June. Even when compared to 2021, a year marked by the economic effects of the COVID-19 pandemic, the sector’s revenue still shows a decrease. In this case, the reduction is 13.8% when compared to July 2021.

The main factor dragging down overall performance is the domestic market. The accumulated domestic net revenue for the first seven months of 2023 stands at R$126.4 billion, representing a 13.8% decrease compared to 2022. The primary explanation for this is the increase in interest rates since mid-last year, which has deterred investments in machinery and equipment.

International Trade

Exports continue to be the growth alternative for Brazilian manufacturers. In July, sector exports totaled $1.17 billion, a 12.2% increase compared to the previous month and a 16.7% rise over the same month in 2022. Year-to-date, exports have totaled $7.85 billion, a growth of 18.6% compared to the previous year. Abimaq’s expectation for export growth in 2023 is 8.6%.

Imports are also on the rise this year. In July, imports totaled $2.29 billion, and year-to-date imports stand at $15.6 billion. This represents a 2.4% increase compared to June and a 15.8% rise over July of the previous year. The accumulated imports for the year have grown by 14.3% compared to the first seven months of 2022. China accounts for 24% of the total imports in the sector.

Source: Valor Econômico

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