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Brazil: Footwear sector to grow 19% in 2021

Jan 12, 2021 Brazil
Brazil: Footwear sector to grow 19% in 2021
The forecast is made by Abicalçados, the Brazilian Footwear Industries Association (Abicalçados), and follows a fall in year 2020 estimated to be around 25%. This placed the production of the Brazilian footwear industry at the same level as the one registered 16 years ago
2020 was a difficult year for the Brazilian footwear industry: the footwear industry saw its production going down by 27% (until October, according to data by the Brazilian Institute of Geography and Statistics - IBGE). For the end of the year, the fall is estimated to be around 25%, causing the sector to go back to the productive level registered 16 years ago, in the range of 650 million pairs. The decline, according to Abicalçados is also influenced by footwear exports, which until November fell by 19.4% (to 84.48 million pairs).

The Executive President of Abicalçados, Haroldo Ferreira, points out that the COVID-19 pandemic severely affected the footwear industry, which should end the year with 250 million fewer pairs and with the loss of about 20 thousand jobs: "There is a recovery trend seen in the last months of 2020. For the beginning of next year, this is the trend, especially considering vaccination and normalization of physical commerce, on which we are still dependent". The same source emphasized the forecast for a growth of 19% over 2021, therefore with the sector still ending next year below the records of 2019. “If we tie with 2019, it will be only in 2022”, projects Mr. Ferreira.

Ferreira says that the year was not only worse due to some stimulus measures adopted by the Federal Government, such as MP 936, which allowed the preservation of jobs through flexible working hours and temporary suspensions of employment contracts, and the exemption from payroll payments, which allowed companies to continue replacing the 20% payment on the payroll with 1.5% of gross revenue, excluding exports. “They were fundamental (the initiatives). The year could have been much worse than it was”, he concludes. On the other hand, the leader of Abicalçados emphasizes that in order to continue a more robust and sustainable recovery, it is necessary to advance in the structural reforms of the Brazilian State, especially with regards to tax and administrative reforms. “What is certain is that we cannot live with a state the size it is, with public debt growing and taxes on the productive sector high. It is necessary to reduce bureaucracy and reduce the tax burden in order to have the minimum competitiveness to compete with international players, both here and abroad”, he pointed out.

Image credits: Mariano Diaz on Unsplash

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