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Challenges loom for the Brazilian footwear industry in 2025

Dec 19, 2024 Brazil

With tax reform and trade protection as priorities, Brazil's footwear industry expects pressing challenges in 2025, including payroll tax changes, high interest rates and import competition

Brazil’s footwear industry is projected to end 2024 with a production increase of over 3% compared to 2023, surpassing 890 million pairs, according to the Brazilian Footwear Industries Association (Abicalçados). This growth is driven by rising domestic demand, supported by a declining unemployment rate of 6.2% and improving income levels.

In contrast, exports have decreased significantly, with Abicalçados forecasting a 20% year-over-year decrease primarily due to reduced shipments to the United States and Argentina. Despite this, domestic consumption grew by 10% between January and October compared to the same period last year, cushioning the industry against export challenges.

Projections

Looking ahead to 2025, Abicalçados expects production to grow by approximately 2%, reaching 904 million pairs, matching pre-pandemic levels in 2019. Domestic demand is estimated to continue being the primary growth driver. Export figures are projected to remain stable, with estimates ranging from a 0.2% growth to a 1.9% decline compared to 2024.

Challenges

The industry is expected to face challenges in 2025, including the gradual reintroduction of payroll taxes. Abicalçados’ executive president, Haroldo Ferreira, underscored the need for comprehensive tax reform to prevent job creation from being penalised. Additionally, high interest rates, currently at 12.25%, discourage investments and exacerbate household debt levels, which could hinder domestic consumption growth.

Other pressing concerns include the need to protect the national industry from unfair competition, particularly from Asian footwear imports. Ferreira noted the increasing challenge posed by international e-commerce platforms, which are intensifying competitive pressures on local producers.

Image Credits: brazilianfootwear.com

Brazil Economy Exports Footwear Organisations Production