In 2024, manufacturing output increased 3.7%, surpassing the performance of the overall industry (+3.1%), which also includes extractive activities. This growth was robust enough to more than offset the declines of the previous two years.

This performance is noteworthy, with no similar examples in the past decade. The expansion between 2017 and 2019 was not even sufficient to recover the loss of 2016, let alone the 2014–2016 three-year crisis. In 2021, the sector's recovery also failed to compensate for the negative impact of COVID-19 in 2020.

This development, closely tied to falling interest rates, at least until mid-2024, increased credit, and expanded employment and income transfer programs, is worth analyzing by the technological intensity of industrial branches.

This is a periodic analysis conducted by the IEDI, based on the methodology disseminated by the OECD. Manufacturing has activities in four groups: high, medium-high, medium, and medium-low technology.

All of these groups grew in 2024. This is also a distinguishing factor compared to the results of the past decade. Since 2014, in years of  overall manufacturing growth, at least one technological intensity group was left behind. In 2017, medium-low stagnated; in 2018, medium-low fell; in 2019, high and medium technology declined; in 2021, the high and medium-low lost production.

In other words, in 2024, growth was widespread across technological intensity categories.

Among the biggest turnarounds is the high-tech industry, whose production had shrunk for 5 consecutive years but recorded 6.6% in 2024. This was the second best result, not far from the leader, the medium-high technology industry, which grew by 6.9%.

In addition, these higher-tech industries, aided by more modest bases of comparison, showed even greater vigor in the last quarter of 2024: 15.6% in the case of high technology and 12.1% in the case of medium-high technology.

The issue, as the IEDI has been pointing out in its analyses, is that the increase in the Selic base interest rate, as it passes through to other interest rates, weakens demand in many markets served by these industry groups.

High and medium-high technology categories include many branches sensitive to interest rate. The greatest advances in these groups, for example, came from electronics (+14.7%) in high technology, and vehicles (+12.5%) and electrical machines and appliances (+12.2%) in medium-high technology, which are durable consumer and investment goods.

Medium technology has also made significant progress compared to previous years. After falling in 2022–2023, it rose 2.9% last year, driven by the production of rubber and plastics (+5.1%) and non-metallic minerals (+3.9%), both influenced by the dynamism of construction, whose demand is also sensitive to interest rates. In Q4'24, this group gained momentum, recording 5.9%.

The medium-low technology industry evolved most modestly in 2024. It saw production expand by 2.2%, practically at the same pace as in 2023 (2.3%). Food, beverages and tobacco (+1.4%) and coke, petroleum products and biofuels (+1.2%) lost dynamism, a trend exacerbated in Q4'24 (-2.3% and -1.3%, respectively).

Notably, medium-low technology is the only group by technological intensity that surpasses pre-pandemic levels: 3.9% compared to 2019. Among its branches, coke, petroleum products and biofuels advanced the most in the period: +18.4%.

The medium-tech industry, in turn, did not fall into negative territory in this comparison, but only managed to return to pre-pandemic levels: +0.1% in the 2024/2019 contrast. The medium-high industry, while slightly below 2019 levels (-0.8% in 2024/2019), remained nearly stable, with positive momentum from machinery and equipment (+10.8%).

It is high technology that is still furthest from 2019 levels. The gap is -5.2%, largely due to the aviation sector, whose drop was of nearly 40% compared to 2019. The office supplies and information technology branch mitigated this decline (+15.3%). Therefore, Brazil should continue fostering conditions for this segment of the industry to keep expanding as it did last year.

This is especially relevant given the increase in uncertainties in the external environment, including conflicts, geopolitical issues, and the threat of several trade disputes caused by the new US administration. These are likely to hinder global trade dynamism and intensify competition, particularly in higher-tech industries.

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