Monday , July 26 2021

The worst fall in industrial activity

According to the National Institute of Statistics and Census (INDEC), last September the national industry showed a decline of 11.5 percent year-on-year, which was the worst month for this sector in the past decade. Different economists who are critical of Cambiemos management attribute the collapse to the drastic depreciation of the domestic market, the product of the process of non-stop inflation and the loss of purchasing power of most of the Argentine people.

For this difficult scenario an unusual policy must be added from the Central Bank that raises interest rates by the cloud, which makes access to finance for companies practically impossible. According to data released by Indec from the Monthly Industrial Estimator (EMI), in September the only sub-sector that showed an increase was the base metal industry, with 2.7 percent, while the textile industry for example experienced a decline. 24.6 percent; the publishing and printing sector collapsed 21.6 percent); 20.5 percent metalworking and automotive 15.7 percent.

Entrepreneurs in the industrial sector warned, on several occasions, of the serious risks posed by policies promoted by Casa Rosada that increased financing costs, which made it difficult to maintain production levels. But in addition, the National Executive also adopted measures that led to the collapse of domestic demand, which, as expected, had a strong impact on the national industry which had already borne the brunt of inflation.

According to official data, oil production fell 11 percent; one rubber and 20 percent plastic; and chemicals and products 4.7 percent. Non-metallic mineral production, linked to construction, in turn, fell 3 percent.

The problem is that distrust in the national economic model is no longer based on presumptions, but on the results seen. So it is not surprising if consultations with representatives of industry companies from all over the country made by Indec in the framework carried out to develop the Monthly Industrial Estimator, to inquire about the prospects for the last quarter domestic demand, 60.7 percent of the responses reflected a pessimistic view, anticipating that there is a decrease; while 30.5 percent of those consulted thought that a stable rhythm would be maintained; and only 8.8 percent expect increased industrial activity.

On the other hand, among exporting companies, 54.7 percent of those consulted did not believe that there would be major changes until December inclusive; while 28.6 percent expect an increase; and 16.7 percent believe there will be a new fall. The Argentine Industrial Chamber of Commerce (CIAI) warned this week that the current discount rate for small and medium enterprises reached 64.5 percent in the annual average in September, according to the Central Bank of the Republic of Argentina (BCRA).

With this scenario, there are no productive developments in Argentina at this time. The entity noted, on the other hand, that the national government's decision to determine tariffs for gas, electricity and fuel, combined with cutting subsidies, resulted in high input costs; and noted that during the second quarter of this year, with the fall in local clothing sales and exports, domestic clothing production declined 1.8 percent year-on-year.

Also, according to a report released this week by Construya Group, input sales for construction activities fell 17.3 percent in October, showing the fifth consecutive decline so far this year. Most economic analysts agree that in the coming months there will be a deeper and more regrettable crisis, which will result in the loss of new jobs for Argentineans.

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