High Rates Put the Brakes on Brazil’s Construction Boom
Brazil’s construction industry, once a driver of growth, is losing steam. The sector’s GDP is now forecast to rise 2.2% in 2025, down from an earlier 3%, according to Sinduscon-SP and Fundação Getulio Vargas (FGV).
That marks a slowdown from the 4.3% expansion in 2024, when the market surged on housing demand and project launches. The culprit is high borrowing costs. Brazil’s central bank kept the Selic benchmark rate at 15% in late July 2025 to contain inflation.
That decision raised the cost of mortgages and builders’ production loans, directly hitting households and firms that rely on credit. The pressure is already visible.
The Brazilian Association of Building Materials Industries (ABRAMAT) reported that sales revenues fell 2.7% in July compared with a year earlier.
Growth for 2025 so far is only 1.1%, a stark contrast to the strong start of the year. Families and small contractors have postponed purchases as financing becomes more expensive.
Confidence has slipped as well. The FGV Construction Confidence Index dropped to 92.7 points in July, a sign that managers expect tougher months ahead.
The industry still employs more than 3 million formal workers, but hiring momentum is slowing as many firms delay breaking ground on new projects.
Costs also weigh on margins. The National Index of Construction Costs (INCC-M) rose 7.43% in July year-on-year, reflecting higher wages and material prices.
Residential property prices, meanwhile, increased 3.33% in the first half of 2025, according to FipeZAP, helping revenues but not enough to offset rising expenses.
Behind these figures lies a broader shift. Brazil’s overall activity index (IBC-Br) slowed from 4.04% growth through May to 3.9% through June, showing that construction’s slowdown mirrors a cooling economy.
Executives warn that doubts over Brazil’s public finances cast further uncertainty on when interest rates might ease. For an industry that thrived during a credit-fueled rebound, the adjustment is sharp.
With households squeezed and companies postponing investments, the construction sector is shifting from a phase of expansion into one of caution.
More: Brazil news in English, every day from The Rio Times.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.