The Omie Index of Economic Performance of SMEs (IODE-SMEs) indicates that the revenue of small and medium-sized enterprises (SMEs) in the Southern region increased by 8.4% year-over-year. The sector's growth at the national level was 4.5% in 2024. In the fourth quarter, the index showed an increase of 3.3% compared to the same period of the previous year.
In addition to the Southern region, IODE-PMEs indicates that market growth was mainly driven by the good performance of the Northeast (+8.3%) and Southeast (+3.7% compared to 2023). The SMEs in the Central-West region (+0.1%) remained stagnant, and those in the North (-10.4%) contracted.
The index data indicate performance superior to the country's overall GDP in the last year. According to the BCB Focus Bulletin, the median market outlook for GDP in 2024 (whose official closing will occur in March 2025) is at 3.5%.
IODE-PMEs works as an economic thermometer for companies with annual revenues of up to R$50 million, consisting of monitoring 736 economic activities that make up four major sectors: Commerce, Industry, Infrastructure and Services.
Figure 1: IODE-SMEs
(Index number – base: average 2023=100)
Fonte: IODE-PMEs (Omie)
The performance of the national market, according to Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, was conditioned by the expansion of domestic demand and indicates a loss of momentum in the segment, especially in the Industry and Services sectors. "In recent years, there has been a strong increase in families' real disposable income, in a context of fiscal expansion with income transfer programs and precatório payments. Also to be considered are the support of the heated labor market, unemployment close to the historically low level of 6% in the last decade, and rising real incomes that are already higher compared to the pre-pandemic period," he explains.
Figure 2: IODE-PMEs – sectoral openings
(2024 x 2023)
Fonte: IODE-PMEs (Omie)
Business
The main contributor to the improvement of the SME market in 2024 was Commerce, with an increase of 8.1% compared to the previous year. The economist recalls that companies in this sector began a recovery trajectory from the second quarter of the previous year, after a very challenging 2023, reflecting the context of increased consumption in the country. In 2024, the results were positive for wholesale (+9.0% YoY) and retail (+6.4% YoY), with highlights in 'Food', 'Beverages', and 'Hygiene, cleaning, and household conservation products'.
In retail, signs of recovery became more consistent for SMEs in the second half of 2024, evidenced by the sustained growth of commerce over the past six months. Among the activities with the best performance are 'Office equipment', 'Food products', 'Pharmaceutical products with formula manipulation', and 'Hydraulic and electrical materials'.
Services
Another sector of the small and medium-sized business market that resumed expansion last year was Services, with a 2.5% increase, despite the slowdown in the last months of the year (+1.2% in Q4 2024). "The increase also impacted the labor market, with most of the rise in the net number of formal workers concentrated in the Service sector activities throughout 2024," reinforces the economist. They stand out as 'Financial and insurance activities', 'Transport and storage', 'Human health and social work activities', and 'Information and communication'.
Industry
The industrial SMEs slowed down in the second semester, with a 1.5% YoY decline in Q4 2024. Still, the sector ended 2024 with a 2.2% higher revenue compared to 2023, according to IODE-PMEs.
In this context, the sector's progress has been less widespread across the different activities of the industry in recent months. Of the 23 sectors monitored by the index, only 11 showed an increase in the fourth quarter of 2024 compared to the previous year. They are: 'Recording and reproduction of recordings', 'Transport equipment', 'Maintenance, repair, and installation of machines and equipment', and 'Electrical machines, appliances, and materials'.
Infrastructure
Small and medium-sized infrastructure companies ended last year with a 0.8% increase compared to 2023. After a first half of declines, the area began to expand again from August onwards.
Beraldi adds the influence of the municipal election period on the sector. "On one hand, it stimulates some activities; on the other hand, high interest rates tend to inhibit the growth of the construction industry. As a result, infrastructure expansion was driven by 'Waste collection, treatment, and disposal,' 'Electricity,' and 'Specialized construction services,'" he comments. Some segments of the construction industry, such as 'Infrastructure works' and 'Building construction,' showed lower revenue.
SMEs are expected to grow in 2025, but at a more moderate pace
The outlook, based on the IODE-PMEs, indicates a growth of 2.4% in 2025, after an average increase of 6.9% per year in the 2023-24 biennium. According to the economist, despite the macroeconomic challenges and the increase in uncertainties in the domestic economy, there are elements that should support the continuation of Brazil's economic growth this year, even if with some slowdown.
In general, this continuity is supported by a context of income support for families – unemployment at a low level of 6.1% and with no clear signs of reversal. In this context, therefore, it tends to favor some market segments that are more sensitive to income, such as Services and some segments of Retail (food products, hygiene items, pharmaceuticals, etc.).
On the other hand, the high inflation expectations in the country and the increase in the basic interest rate by the Central Bank in recent months are expected to restrain the momentum of consumption and investments, with effects on SMEs, especially from the second quarter of this year. With this, in 2025, there will be challenges for the performance of segments more dependent on the evolution of credit, such as industrial, commercial, and construction activities.
The business environment this year is expected to be highly susceptible to shocks in both national and international scenarios. "Internally, there is the addressing of fiscal issues (balance between government revenues and expenditures), in addition to the approval of the Tax Reform, which will take effect from 2026, but entrepreneurs are advised to estimate the impacts of the changes as soon as possible," advises Beraldi. "Externally, in addition to monitoring geopolitical tensions worldwide, tracking the political and economic evolution of the US at the beginning of Trump's administration is quite relevant, given the significant impacts on the development of economies in developing countries, such as Brazil," he adds.
