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Brazil is booming: German companies rely on optimistic business!
German companies recognize opportunities in Brazil: optimism despite global challenges before the German-Brazilian Business Days.
Brazil is booming: German companies rely on optimistic business!
The German economy is optimistic about business opportunities in Brazil, despite global economic uncertainties. In a recent survey involving over 4,600 companies from various countries, more than 500 companies based in South and Central America, including over 30 in Brazil, reported positive business expectations. Volker Treier, head of foreign trade at the DIHK, highlights Brazil's potential as a sales market and for investments. This is happening in the run-up to the 41st German-Brazilian Business Days, which begin on June 16th in Salvador da Bahia. According to the survey, German companies in the region largely rate their business situation positively: 46% say they are doing good business, while only 9% are in a bad situation.
What is particularly striking is that 35% of German companies in Brazil report a good business situation and 68% expect an improvement in business development in the coming year. Despite the challenges posed by geopolitical risks and US tariff policy, Brazil brings advantages through its robust domestic market and well-developed infrastructure. 36% of companies across the region plan to increase their investments. In Brazil, 33% of companies intend to increase their spending as well.
Role of the automotive industry
An important sector for the German economy in Brazil is the automotive industry, which is currently undergoing upheaval. Brazil is a key market for European manufacturers. German companies have often had their own factories here for decades. Volkswagen reports that Brazil was the largest sales market after China and Germany in 2024. Competition in the South American car market is intensifying, particularly due to the emergence of Chinese electric car manufacturers and the increased use of biofuels in the transport sector.
The Mercosur countries, which include Brazil, have set high tariffs on vehicle imports to protect local industries. However, gradual tariff liberalization is being sought, with full liberalization for combustion engines planned within 15 years. German car manufacturers, such as Volkswagen, see the EU-Mercosur agreement as an opportunity as it should increase predictability and stability for trade. The Association of the Automotive Industry (VDA) welcomes the agreement as an important step for the export industry.
Market perspectives and challenges
Another incentive program in Brazil is “Mover,” which attracts investment in research and development. For companies that export automotive parts, Brazil offers a special regime that allows duty-free status if the parts are not produced locally. This could be particularly beneficial for German automotive parts suppliers without local production.
Despite the positive outlook, the volatile exchange rate remains a major challenge for 45% of companies in Brazil, followed by a shortage of skilled workers. In addition, the USA's protectionist trade policy has a negative impact on the business of around 50% of companies in Brazil and 59% in South and Central America. Nevertheless, the German economy as a whole shows remarkable confidence in the development of the market, which is due to the great potential that Brazil offers.
Through the combination of technological advances, promising business development and strategic economic measures, many German companies see Brazil as a market with significant growth opportunities in the future.