Brazil’s Construction Industry Slows Down as Costs Rise and Loans Get Pricier

Brazil’s construction sector, a key part of the country’s economy, is losing momentum in 2025. Official data from industry groups shows growth will likely be between 1.9% and 2.8% this year, which is slower than in recent years.

The value of all construction activity could reach about BRL 707 billion by the end of 2025. Builders are less confident about the future. The main confidence index dropped to its lowest level since 2022.

Companies report fewer new contracts and tougher business conditions. The number of people working in construction is also not growing, and some firms are even cutting jobs.

Several reasons explain this slowdown. Brazil’s central bank raised interest rates to 13.25%. This makes it more expensive for people and companies to borrow money for building homes or offices.

At the same time, prices for building materials and wages have gone up. The main construction cost index rose 6.85% over the past year. Many firms also say it is hard to find skilled workers.

Even with these challenges, government programs are helping keep the sector afloat. Projects like Minha Casa Minha Vida, which builds affordable housing, and Novo PAC, which funds infrastructure, are still investing large amounts of money.

Novo PAC alone has a budget of BRL 1.7 trillion through 2026. Private investment is also important. Big projects, such as new metro lines in São Paulo, are creating jobs and business for construction companies.

The sector still makes up more than 6% of Brazil’s economy and is a major employer. In 2025, Brazil expects to create up to 1.5 million new formal jobs, with construction playing a big part.

Looking forward, experts believe the construction sector will keep growing, but at a slower pace—about 2% per year for the next few years. High interest rates, rising costs, and a shortage of skilled workers will continue to be problems.

New US tariffs on steel and aluminum could also make things harder. The future of Brazil’s construction industry depends on whether government and private investment can balance out these pressures.

The sector’s health matters because it affects jobs, economic growth, and the country’s ability to build new homes and infrastructure.

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