By case, according to Industrial Production Index measured by the Orlando Ferreres consultancy, in January growth of 2.9% year-on-year was recordedwhile the seasonally adjusted measurement registered a contraction of 1.5% compared to December.
From the firm they detailed, in any case, that the improvement in the comparison compared to the same month of 2022 is “related more to the weak start that we observed during January of last year than to a real improvement.” “Anyway, the evolution during the first two months of the year is subject to high volatility due to the plant stoppages that alternate in the different manufacturing sectors during this period. For example, in the automotive industry, some stoppages for vacations and changes in lines were brought forward during December, so the level of production in January this year was 46% higher than the same month last year,” they explained from Ferreres.
“For the coming months, our base scenario anticipates a downward path for the progress of industrial activityaffected by lower domestic demand, lack of foreign currency, and a very fragile and politically uncertain macroeconomic context,” the consultant detailed.
The Industrial Production Index (IPI) of FAITHFUL also registered a year-on-year improvement in January of 3.3%. “The month was long in terms of days of activity in the year-on-year comparison despite the stoppages for vacations, while it should not be forgotten that in January 2022 industrial activity was impacted by the wave of infections with the Omicron variant of Covid, which affected plants in different sectors. Likewise, a year ago several industrial establishments suffered power outages as a result of the heat wave,” the consultant explained.
Meanwhile, from FIEL they estimate a growth in seasonally adjusted terms of 2.2% compared to December, “alternating the sign in the last three months, placing industrial production 5.6% below the level reached last April”. “Short-term prospects continue to show the scarcity of foreign currency as the main obstacle to the development of industrial activity. At the same time, the indebtedness of the firms with their foreign suppliers and their parent companies to support the importation of inputs, parts and pieces, has reached a level that seems unlikely to be increased, together with the fact that the cancellation of maturities will put pressure on the stock of reserves, to which will be added the needs of the public sector to cancel its debt commitments without a net contribution from the IMF with what happened in 2022”, they projected.
In any case, they estimated from Fiel, there may be some aspects that mitigate these perspectives: “The implementation of the credit guarantee mechanism in the exchange with Brazil together with an eventual greater use of the currency swap with China, could generate some relief in the scenario. In an electoral year, the distributive bid will gravitate on the performance of the non-durable sectors. If it deepens its export insertion and improves participation in local sales, the automotive sector will once again show one of the best performances. At the same time, non-metallic minerals will maintain a positive drag from the expansion of capacity in the sector”.
sector projections
The sectoral surveys coincide with the private estimates. By case, The report from the UIA Study Center highlighted a growth in industrial activity of 6.5% in 2022 compared to the previous year.
“Looking ahead to 2023, the year began with a good level of activity compared to the previous year, but with a low statistical carryover and a visible slowdown in production. Given the election year and the macroeconomic challenges ahead, the focus of the situation will continue to be on the exchange rate gap, international reserves and import controls, which will condition the dynamics of the activity”, they pointed out from the entity.
For her part, the CAME pointed out that in January the production of the SME manufacturing industry rose 3.5% annually, completing four consecutive months of growth. “4 of the 6 large sectors measured grew. In the monthly comparison, activity practically remained the same with a slight increase of 0.3%”, they highlighted.
“An outstanding data from January was the large proportion of industries that are evaluating or have already decided to make new investments, which reached 46% of the companies in the survey,” the entity’s report detailed, although it added: “In return, companies express concerns that require urgent solutions. In the first place, the administration of the imports of inputs for the national production supposes a real and concrete restriction to the development of the local industry. Finally, it is worth noting the fear that the future of the agricultural campaign generates in the food, machinery and transport material industry”.
Source: Ambito
