Businessmen fear that recession generated by the Government’s fiscal adjustment becomes a depression from which it is difficult to get out. Above all, their activity is being affected by the drop in consumption. 24 hours after President Javier Milei ratify the direction of the economic plan, the Argentine Industrial Union (UIA) demanded “urgent” policies that “allow demand to be sustained” after nine straight months of contraction.
The request was announced after the usual biweekly meeting of the Board of Directors of the factory, which is made up of representatives of the associated entities from the interior of the country. In a note from the UIA, led by Daniel Funes from Rioja, it was pointed out that “The sectors and regions represented on the Board of Directors expressed their serious concern about the drop in activity and its impact, mainly on small and medium-sized industries.”
The statement recalls that “according to data from the third monthly industrial activity report of the UIA Study Center, In February, industrial activity recorded a year-on-year drop of -6.8% and a monthly increase of +0.7%, without seasonality.”
“This is the ninth consecutive month with a drop, while the first two months of 2024 accumulates a year-on-year decrease of -8.3%,” indicates the entity.
The UIA maintains that “a sector level, the report shows that the downward trend occurs in most of the items that make up the index.” “In 9 out of 12 the production level fell. Preliminary data for March anticipate a worsening of the trend with increased costs and a drop in demand,” the entity adds.
In this sense, it is reported that “The representatives also pointed out the urgent need to implement policies that allow sustaining demand, “Consider the impact on the national industry of opening trade without first lowering taxes, the recent tariff increases and the loss of employment.”
The report recalls that “according to the PyME Observatory Foundation (FOP), actual sales (invoiced deflated by the company’s own prices) of industrial SMEs in the fourth quarter of 2023 compared to the same period last year “They fell 12% and occupancy decreased 3%.”
The SME industry in decline
For its part, the Argentine Confederation of Medium Enterprises (CAME) reported that the industrial production of small and medium-sized companies decreased by March 11.9%, so that closed the first quarter with a drop of 19.1% compared to the same period in 2020.”
“In addition, a decline of 3.4% was observed in the seasonally adjusted monthly comparison,” the report adds. According to CAME, ““This situation reflects the seriousness of the situation in the sector and the need to take urgent measures to reverse this trend.”
“It is the fourth consecutive month that“Factory activity is declining and, given the way production orders are coming in, SMEs do not see a bottom in the short term.”adds the report.
According to private data, “the companies surveyed operated in March with 70% of their installed capacity, showing a drop of 0.8 percentage points compared to February.”
“There are sectors with high stock levels that are torn between continuing to produce so as not to cut the process and having to lay off staff or slow down,” warns CAME.
Source: Ambito
