High Selic Rate Pressures Brazilian Industry into Stagnation
Brazil's industrial sector contracts under the strain of a 15% Selic rate, facing shrinking production, waning business confidence, and rising imports.
- • CNI identifies the 15% Selic interest rate as the main cause of industrial stagnation.
- • Industrial production declined by 0.2% in 2025, with confidence at a 10-year low.
- • High interest rates have made credit costly and discouraged investment and consumer demand.
- • Imports of consumer goods rose 15.6%, increasing market competition against local industry.
Key details
The Brazilian industrial sector is facing significant stagnation as a result of the punitive 15% annual Selic interest rate, according to the National Confederation of Industry (CNI). This high rate has made credit more expensive and curbed consumer appetite, leading to a decline in industrial production and investment. CNI highlighted a 0.2% drop in the production of the transformation industry in 2025, which reflects its struggles to convert raw materials into consumer goods amid challenging economic conditions.
Mário Sérgio Telles, CNI's director of economics, emphasized the "enormous" damages caused by these high interest rates, noting that the policy has deterred investments essential for modernizing and expanding Brazil's factories. In addition, imports of consumer goods surged by 15.6% last year, intensifying competitive pressures and capturing a significant share of the domestic market.
The Industrial Entrepreneur Confidence Index (Icei) recorded its lowest level in a decade for January, signaling a persistent lack of confidence among business leaders which threatens further industrial growth and economic recovery. The Brazilian Institute of Geography and Statistics (IBGE) confirmed these issues in its Monthly Industrial Survey, revealing that overall industrial production increased only 0.6% in 2025, a sharp slowdown from the 3.1% growth seen in 2024. Notably, this deceleration accelerated in the second half of the year parallel to the tightening monetary policy.
CNI sounded an alarm concerning the broader economic outlook, warning that without adjustments to the interest rate policy and measures to stimulate domestic demand, the forecast for economic growth in 2026 remains at risk. This situation could undermine not only the transformation industry but also the wider national economy in the near term.
In sum, the combination of high interest rates, reduced consumer demand, and increased competition from imports is creating a difficult environment for Brazil’s industrial sector, with declining production, poor business confidence, and weakened investment activity.
This article was translated and synthesized from Brazilian sources, providing English-speaking readers with local perspectives.
