The strong devaluation and the consequent drop in salaries had a full impact on the consumption and generated a collapse in the used industrial capacity of the small and medium enterprises (SMEs). In January, just a month after the inauguration of Javier Milei, the index It sank to 45%.
The figure comes from the survey carried out in the Radar SME Survey of the Association of National Businessmen and Businesswomen for Argentine Development (ENAC), where one observes 16 point drop with respect to the fourth quarter of 2023.
The analysis carried out by the entity that conducts Leo Bilanski points out that the industrial capacity used by the SME sector the government of Alberto Fernandez in 61.5%, despite the difficulties they had to go through.
SME: fall in consumption and collapse of used industrial capacity
However, before the end of the year the effect of the 118% depreciation of the peso ordered by the Minister of Economy of the current government, Luis Caputo, which quickly became a wholesale inflation of 54% that had a full impact on the economic activity.
Salaries, hit during the last stretch of the previous government, felt the effect of the inflationary jump, which caused a deterioration in the consumption. Retail sales plummeted 28.5% in January.
The annual average for 2023 closed at 62%, about 10 points above the administration of Mauricio Macri but a dozen below the last period of Cristina Fernández de Kirchner. But the first month of 2024 registered a drop of between 16 and 17 points.
“About 100 SME industries with registered workers in charge, activity in January plummeted to 45%”reported from ENAC. Furthermore, they reported that “7 out of 10 industries are operating at less than 60% of their available industrial capacity.”
The capacity used, in pandemic figures
The current figures are at similar levels to 2020, when the global economy was strongly affected by the effects of the COVID-19, which generated a contraction of world trade.
Bilansky, President of ENAC, explained that the data arises from the combination of several problems that still are without resolving “like the restrictions on imports and the lack of dollarsthe inflation galloping that the previous Government left and that has increased in December and January, the brutal devaluation that the current Government applied and the absence of an economic plan that allows projecting the development of companies with consistent budgets”.
All of this means that the SME sector is immersed in a scenario that Bilinski rated as “significant uncertainty for the industrial entrepreneur” since there is no “clarity” in the productive direction of the current government.
Given this situation, the owner of ENAC considered it a possibility that industrial activity “will be flattened, one or two quarters, until some uncertain variables of the economy are cleared up.” However, he pointed out that “It is clear” that once the industry gets back up and running “there will be fewer jobs.”
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Source: Ambito
