Brazil’s Machinery Makers Now Face an 8.4% Fall in 2026
Brazil · INDUSTRY
Key Facts
- —Forecast Abimaq revised its 2026 forecast from a 3.2% contraction to an 8.4% contraction.
- —Domestic market Net domestic revenue forecast cut from a 3.6% fall to a 7.7% fall.
- —Exports Dollar exports now seen falling 1.1%, against 6.4% growth before.
- —Reasons High interest rates and Chinese imports sold below the cost of Brazilian raw materials.
- —Interest rates Brazil’s Selic policy rate stands at 14% a year.
The downgrade comes after a strong 2025, when sector revenue rose 7.3% to 298.98 billion reais (US$58 billion).
Brazil’s machinery and equipment industry now expects a much worse year. Abimaq published the new estimate on 1 September 2026.
It is a sharp downgrade from the previous 3.2% contraction. The trade body now sees revenue falling more than twice as fast.
A Sharp Downgrade for Machinery and Equipment
Abimaq, the Brazilian machinery and equipment industry association, cut its 2026 forecast from a 3.2% contraction to an 8.4% contraction. The forecast measures net sales revenue, known in Portuguese as receita liquida total.
It is not physical output or units sold, and the export leg is measured in US dollars.
This revision reflects a bleaker outlook for the sector. The sector is already shrinking.
Net revenue fell 13.6% in the first half of 2026, and July sales dropped 8.9% on the year.
In fact, the domestic market revision is even sharper, with net domestic revenue now expected to fall 7.7% instead of 3.6%.
Exports Also Turn Negative
Exports, which were previously expected to grow, have also reversed course. Abimaq now sees a 1.1% decline in US dollar terms, instead of 6.4% growth.
Therefore, both domestic and international demand are weakening. This double reversal underscores the breadth of the downturn.
Why the Outlook Worsened
Abimaq blames two things above all. One is borrowing costs that remain very high.
The other is Chinese machinery sold here below what the raw material alone costs a Brazilian maker.
Its executive president is José Velloso. He pointed to wind turbine blades as the clearest example.
These conditions affect investment and exports, as companies delay purchases. As a result, the machinery and equipment sector feels the pinch early.
2025 Was a Strong Year
In contrast, 2025 was a robust year for the sector. Revenue rose 7.3% to 298.98 billion reais (US$58 billion), and net domestic revenue reached 221.68 billion reais (US$43 billion).
Moreover, total investment in machinery and equipment in Brazil rose about 7.9% in 2025, reaching roughly 411 billion reais (US$80 billion). This recent strength makes the 2026 reversal more striking.
Machinery as a Leading Indicator
Machinery revenue is a read on capital spending. Companies buy machines when they intend to expand, so the figure moves before output does.
Therefore, this decline signals that businesses are pulling back on expansion plans. In short, the machinery and equipment forecast hints at broader economic slowdown.
High Interest Rates Weigh on Financing
Brazil’s Selic policy rate stands at 14% a year, which raises the cost of financing equipment purchases. Consequently, expensive credit discourages investment in machinery and equipment.
The central bank has cut the rate four times since March, from 15%. Rates remain high enough to hold investment back.
Gross Fixed Capital Formation Context
Gross fixed capital formation is the national accounts term for investment in things that last, such as buildings and equipment. The machinery and equipment revenue forecast is part of this broader investment picture.
Although the forecast covers only machinery and equipment, it offers a window into capital spending trends. By contrast, physical output may not fall as sharply, since revenue is affected by prices and mix.
What This Means for the Economy
The downgrade suggests that Brazilian businesses are becoming more cautious. With credit still expensive and imports undercutting them, they are postponing investments.
Even so, the 2025 strength provides a buffer. However, the sharp reversal indicates that the headwinds are strong.
Outlook for Machinery and Equipment
Overall, the 8.4% contraction forecast for 2026 is a significant shift. It reflects a combination of domestic and external pressures.
For now, Abimaq sees no immediate recovery, as the reasons for the downgrade persist. Therefore, the machinery and equipment sector faces a challenging year ahead.
Frequently Asked Questions
What does the 8.4% fall in Brazil’s machinery sector forecast mean?
It means Abimaq expects net sales revenue of machinery and equipment to contract by 8.4% in 2026. This is a measure of revenue, not physical output or units sold.
Why did Abimaq revise its forecast so sharply?
Abimaq points to high interest rates and Chinese machinery sold below the cost of Brazilian raw materials. Both squeeze investment and sales.
How did the sector perform in 2025?
Sector revenue rose 7.3% to 298.98 billion reais (US$58 billion) in 2025. Net domestic revenue was 221.68 billion reais (US$43 billion).
What is the Selic rate and how does it affect machinery purchases?
The Selic is Brazil’s benchmark interest rate, currently at 14% a year. A high rate raises the cost of financing equipment, discouraging companies from buying machinery.
Connected Coverage
Sources: Abimaq; Estadao/Broadcast; Banco Central do Brasil; Brazilian industry press.
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