Brazil’s Electro-electronic Sector Annual Revenue to Remain Stable at R$154 Billion

RIO DE JANEIRO, BRAZIL – Revenue from the electro-electronic industry should end 2019 at R$154 (US$37) billion. According to the Brazilian Association of the Electrical and Electronic Industry (Abinee), despite the nominal growth of five percent compared to 2018 (R$146.1 billion), there was no real increase, since inflation in the sector, according to the Producer Price Index (IPP), also closed the year at five percent.

The association released this Thursday, December 5th, in São Paulo, the annual indicators.

The industrial production of electro-electronic goods also showed stability in 2019 compared to 2018. The stability in revenue and production of the sector occurs after two consecutive years of positive results.

“This year, the sector went sideways and we were unable to show growth,” said the executive president of Abinee, Humberto Barbato.

He emphasized that the productive activity fell short of expectations due mainly to the delay in the approval of reforms, which only had a positive outcome in the second semester.

Exports shrank five percent in 2019, from US$5.9 billion to US$5.6 billion. Imports rose one percent from US$31.8 billion in 2018 to US$31.9 billion this year.

With this, the trade balance deficit should reach US$26.4 billion, two percent higher than in 2018 (US$25.9 billion).

According to Barbato, the rise in the dollar did not affect exports. “We did not have a growth in exports, which would be natural to happen from the devaluation of the real. What happened is that, as we have a very considerable dependence on imported components, evidently this ended up being passed on to the prices of products, so much so that the inflation of the sector was five percent, which is why this year we moved sideways,” he said.

The update of the Informatics Law, with the approval of the new rules of industrial policy to the Information and Communication Technology (ICT) sector, by the Chamber of Deputies in November, is expected by Abinne. According to the entity, the approval brings legal security to companies.

“We hope that [the issue] can be resolved next week, so we hope that we can start the year 2020 already from the perspective of a new legislation that will, of course, unlock some investments,” said Barbato.

For 2020, entrepreneurs in the sector have favorable expectations. The most recent survey conducted with Abinee members indicated that 76 percent of companies project growth in sales / orders next year; 21 percent, stability and only three percent, a decline.

Also, the latest Confidence Index of the Electro-electronic Sector (ICEI), released by Abinee in November, reached 61 points. Above 50 points, the ICEI indicates business confidence. “We are closing 2019 with a positive Confidence Index, but lower than last year,” said Barbato.

Considering the projected growth of the Gross Domestic Product (GDP) of 2.2 percent and inflation around 3.6 percent per year in 2020, the electronics sector expects a nominal growth of eight percent and an inflation-adjusted growth of four percent in revenues, which should reach R$166 billion.

Abinee also projects a three percent increase in production and an increase in the level of employment, which should increase from 235,000 to 239,000 workers.