Economy

Why does Brazilian industry keep shrinking?

Over the past 30 years, Brazil’s transformation industry has fallen to 1947 levels. While part of the drop, going all the way back to the beginning of the Second Republic, is a reflection of the current economic crisis, it is undeniable that Brazil is facing a structural change in its economy.

Why is this happening?

For industry, the answer is a combination of several issues: “legal insecurity, bureaucracy, high taxes, higher interest rates that curb productive investments, a weaker currency, and a sheer lack of infrastructure are the main reasons why local producers face more costs,” explains Paulo Skaf, president of the São Paulo Federation of Industries (FIESP), speaking to The Brazilian Report.

According to FIESP, in 2017 alone the industry sector spent BRL 37 billion on tax bureaucracy, an example of the so-called “Brazil cost” on...

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