SME turnover falls 1.2% in the first quarter of 2025, worst result since 2021

The year 2025 will be challenging for small and medium-sized companies, according to the Omie Index of Economic Performance of SMEs (IODE-SMEs). The survey points out that the turnover of small and medium-sized Brazilian companies (SMEs) registered a decrease of 1.2% in the first quarter of this year, compared to the same period of 2024. Compared to the fourth quarter of 2024, the fall was even greater (-1.5%).

This performance represents the worst result of the indicator since the last quarter of 2021, reflecting the loss of breath in certain segments of Services, in addition to the retraction in SMEs in the industrial and infrastructure sectors.

Figure 1: IODE-SMEs
(Index number 4 basis: 2023 = 100 average)

Source: IODE-PMEs (Omie)

The IODE-PMEs works as an economic thermometer of companies with revenues of up to R$50 million annually, consisting of monitoring 736 economic activities that make up four major sectors: Commerce, Industry, Infrastructure and Services.

For Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, management platform (ERP) in the cloud, IODE-PMEs already signaled a significant loss of dynamism in the SME market from the middle of the fourth quarter of 2024, amid the deterioration of the domestic macroeconomic scenario. “Despite the continuity in the growth of real labor incomes (the main component of Brazilian household income ', the increase in fiscal uncertainties in relation to the coming years has put pressure on inflationary expectations and driven the rise in interest rates, compromising the purchasing power of households, explains.

In the external scenario, the environment has also been more adverse, given the uncertainties related to the US tariff policy under the Trump administration and the responses adopted by other major economies, especially China.

A data that reinforces this scenario of greater difficulties for the evolution of the business of SMEs was the significant fall in consumer confidence between December 2024 and February 2025 (-7.6% in the period), as pointed out by the Consumer Survey of FGV-IBRE. This decline reflected, above all, the worsening in the expectations of economic agents.

In the same direction, the last edition (march) of the Omie Survey of Small Companies, reinforces this panorama of deterioration of the expectations of small entrepreneurs in relation to the domestic economic environment. The survey shows that entrepreneurs are more pessimistic, with 51% signaling a worsening prospect of the economy, a number greater than the 39% of the survey conducted in September 2024. “Due to this context, the fall of the IODE-SMEs in the first quarter of 2025 reinforces the perception that this will be a more challenging year for the Brazilian economy, comments the economist.

Despite declines in several sectors at the beginning of the year, Trade remained in positive territory, according to the index. SMEs recorded growth of 7.9% in real average sales in the first quarter of 2025, compared to the same period of 2024. However, the disaggregated analysis shows quite different performances between wholesale and retail.

Wholesale trade SMEs showed a significant growth of 10.2% in this first quarter, boosting overall market performance. (Wholesale beverage trade, 10.2% wholesale resins and elastomers and 2Wholesale trade paper and cardboard waste and’ were the activities with the highest prominence. 

In retail, after signs of recovery throughout the second half of 2024, SMEs again recorded a modest drop of 1.3% in this first quarter. (Varejo de medicamentos veterinarians, (Varejo de equipamento para office and 3% voltages, and ERIC were the activities that continued to perform positively in the period.

Figure 2: IODE-PMEs ¡n sectoral openings
(1Q2025 x 1Q2024)

Source: IODE-PMEs (Omie)

The Services sector is the largest market for SMEs in terms of volume of companies. In the segment, the IODE-PMEs points to stability in average revenue, with variation of -0.2% compared to the same period of the previous year. On the one hand, the sector has been negatively impacted by the weakening of activities that stood out in 2024, such as Food Feeding, 1Professional, scientific and technical activities’ and PERSONAL services. On the other hand, the sector had good numbers in the 1stRI by the growth of the activities of Information and Communication, ’ and Storage.

The results of retail SMEs and some segments of the Services sector show the recent impact of increased inflationary pressures and the fall in the confidence of economic agents, factors that have reduced the consumption momentum of households.In addition, the scenario of rising interest rates in the country has especially impaired the most capital-intensive activities, as shown by the results of the IODE-SMEs in the Industry and Infrastructure sectors.

In Industry, there is a loss of breath since the second half of 2024, with the contraction intensifying in the first months of 2025. In the first quarter of this year, the sector registered a fall of 5.8% and the retraction among industrial SMEs is shown to be disseminated among the activities monitored by the index. Of the 23 subsectors of the manufacturing industry accompanied by IODE-PMEs, 15 presented negative performance. Still, there are activities that have demonstrated resilience and followed in growth in the period, highlighting: (Impression and reproduction of engravings of the’ recordings, (Fabrication of wood products and of metalFabrication of the metal).

In the Infrastructure segment, SMEs again showed a decrease, with a decrease of 3.3% in this first quarter, after the positive performance recorded in the fourth quarter of 2024 (+9.7% YoY). The negative result affects activities such as Infrastructure Works, 31BUilding of buildings and even (Specialized services for construction’. On the other hand, the maintenance of growth in the activities of Water, sewage, waste management and decontamination has contributed to contain an even more pronounced fall of the sector as a whole in recent months.

Finally, the IODE-SMEs also allows the regional analysis of the behavior of Brazilian SMEs. In the first quarter of 2025, the index reveals that the SME market remained in positive territory in the Southeast (+0.6% YoY) and especially Midwest (+2.5% YoY). On the other hand, there was, on average, a decrease in the South (-3.5% YoY), Northeast (-3.5% YoY) and North (-10.4% regions of the YoY market).

According to Beraldi, even with major macroeconomic challenges on the radar, the basic scenario for the Brazilian economy does not suggest a total interruption of growth. “In general terms, the recent results of the IODE-SMEs reinforce the expectation that the SME sector should grow more in line with the general projections for the Brazilian GDP (with the median of the forecasts currently around 2%, according to the Focus Bulletin of the Central Bank). This scenario is different from recent years, when the SME market grew at a faster pace than the economy as a whole”, he evaluates.