The Omie Index of Economic Performance for SMEs (IODE-SMEs) indicates that the revenue of small and medium-sized enterprises (SMEs) in the Southern region grew by 8.4% year-on-year. The sector’s nationwide growth was 4.5% in 2024. In the fourth quarter, the index showed a 3.3% increase compared to the same period the previous year.
Besides the Southern region, the IODE-SMEs suggests that market growth was primarily driven by the strong performance of the Northeast (+8.3%) and Southeast (+3.7% vs. 2023). SMEs in the Central-West region (+0.1%) remained stagnant, while those in the North (-10.4%) declined.
The index data points to performance surpassing the country’s overall GDP last year. According to the BCB’s Boletim Focus, the median market outlook for 2024 GDP (whose official figures will be released in March 2025) stands at 3.5%.
The IODE-SMEs serves as an economic thermometer for companies with annual revenues of up to R$50 million, monitoring 736 economic activities across four major sectors: Commerce, Industry, Infrastructure, and Services.
Figure 1: IODE-SMEs
(Index number – base: 2023 average=100)
Source: IODE-SMEs (Omie)
According to Felipe Beraldi, economist and manager of Economic Indicators and Studies at Omie, the national market’s performance was influenced by increased domestic demand but shows signs of slowing momentum, especially in the Industry and Services sectors. “In recent years, there has been strong growth in real disposable household income, driven by fiscal expansion through income transfer programs and court-ordered debt payments. Also noteworthy is the sustained heated labor market, unemployment near the historically low level of 6% over the past decade, and rising real incomes already surpassing pre-pandemic levels,” he explains.
Figure 2: IODE-SMEs – Sector Breakdown
(2024 vs. 2023)
Source: IODE-SMEs (Omie)
Commerce
The main contributor to SME market improvement in 2024 was Commerce, which grew by 8.1% year-on-year. The economist notes that companies in this sector began recovering in the second quarter of the previous year after a challenging 2023, reflecting increased national consumption. In 2024, results were positive for wholesale (+9.0% YoY) and retail (+6.4% YoY), particularly in ‘Food’, ‘Beverages’, and ‘Household cleaning and hygiene products.’
In retail, recovery signs became more consistent for SMEs in the second half of 2024, supported by sustained Commerce growth over the last six months. Top-performing activities include ‘Office Equipment’, ‘Food Products’, ‘Compounded Pharmaceutical Products’, and ‘Hydraulic and Electrical Materials.’
Services
Another SME sector that resumed expansion last year was Services, with a 2.5% increase despite a slowdown in the year’s final months (+1.2% in Q4 2024). “The growth also impacted the labor market, with most formal job gains concentrated in Services activities throughout 2024,” emphasizes the economist. Key performers include ‘Financial and Insurance Activities’, ‘Transportation and Storage’, ‘Human Health and Social Services’, and ‘Information and Communication.’
Industry
Industrial SMEs slowed in the second half, contracting by 1.5% YoY in Q4 2024. Nevertheless, the sector ended 2024 with 2.2% higher revenue compared to 2023, per IODE-SMEs.
In this context, sector growth was less widespread across industrial activities in recent months. Of the 23 subsectors tracked by the index, only 11 showed year-on-year growth in Q4 2024: ‘Printing and Reproduction of Recordings’, ‘Transport Equipment’, ‘Maintenance, Repair, and Installation of Machinery and Equipment’, and ‘Electrical Machinery, Appliances, and Materials.’
Infrastructure
Small and medium-sized Infrastructure companies ended the year with a 0.8% increase versus 2023. After a first-half decline, the sector resumed expansion starting in August.
Beraldi notes the influence of municipal elections on the sector: “While it stimulates some activities, high interest rates tend to curb construction growth. Thus, Infrastructure expansion was driven by ‘Waste Collection, Treatment, and Disposal’, ‘Electricity’, and ‘Specialized Construction Services.” Construction segments like ‘Infrastructure Works’ and ‘Building Construction’ saw lower revenue.
SMEs Expected to Grow in 2025, but at a More Moderate Pace
Based on IODE-SMEs, projections indicate 2.4% growth in 2025, following an average 6.9% annual increase in 2023-24. The economist states that despite macroeconomic challenges and rising domestic uncertainty, factors supporting Brazil’s economic progress this year remain, albeit with some slowdown.
Overall, this continuity is underpinned by sustained household income—with unemployment at a low 6.1% and no clear reversal signs—favoring income-sensitive segments like Services and certain Retail areas (food products, hygiene items, pharmaceuticals, etc.).
Conversely, high inflation expectations and recent central bank interest rate hikes may curb consumption and investment, affecting SMEs, especially from Q2 2025 onward. Thus, credit-dependent sectors like Industry, Commerce, and Construction will face challenges.
This year’s business environment will be highly susceptible to domestic and international shocks. “Domestically, fiscal issues (balancing government revenues and expenditures) and the upcoming 2026 Tax Reform require early assessment by entrepreneurs. Globally, monitoring geopolitical tensions and U.S. economic and political developments under the new Trump administration is critical, given their impact on emerging economies like Brazil,” Beraldi concludes.
