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Brazil: footwear production expected to grow 3% in 2019

Oct 21, 2019 Brazil
Brazil: footwear production expected to grow 3% in 2019
Driven by the increase in shipments throughout the year, footwear production should grow 3% in 2019. The forecast was presented at an event recently held in Novo Hamburgo (Brazil)
The Scenario Analysis, jointly promoted by the Brazilian Footwear Industry Association (Abicalçados) and the Brazilian Association of Leather, Footwear and Artifact Components Companies (Assintecal), was sponsored by Fenac.

The event began with the presentation of Marcos Lélis, PhD in Economics and consultant for the footwear sector. The expert commented on the effects of the trade war between the United States and China, which has caused a slowdown in world trade, and is expected to continue reflecting in the flows in 2020. According to the same source, so far in 2019, US imports of Chinese products already fell by 12.6% and movements in the opposite direction were also impacted (declined of 17.9%).

Brazilian economy


According to the economist, even though the Brazilian GDP is growing by 0.4% in the second quarter, the economy still faces the lack of substantial investments in infrastructure. Lélis believes the Social Security Reform (waiting to be approved in the country) won't be enough to recover investments in Brazil. “We still have a low use of installed capacity. So, businessman will not invest at this time”, he said, stressing the importance of public-private partnerships for many investments.

Footwear


Better than other industrial sectors, according to Lélis, the footwear sector projects a 3% growth in 2019 production and should reach 972 million pairs.  According to the Market Intelligence coordinator of Abicalçados, Priscila Linck, with the result, the sector still does not recover the decline registered in previous years, returning to the levels registered in 2014. Priscila also said that the result of production should be driven by the increase in exports, around 10%, reaching almost 125 million pairs. The expectation of growth in the domestic market, which absorbs 86% of footwear production, is 0.8%.

The trade war and the resulting uncertainty creates opportunities for Brazilian footwear, but also for products coming from other countries, such as Vietnam and Indonesia. Moreover, while the trade war intensifies, China ends up having to find other markets for their products, which means added competetion from Chinese products in other markets.

Image credits: Rupixen on Unsplash

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