Saturday , November 27 2021

The worst fall in industrial activity


According to the National Institute of Statistics and Census (INDEC), last September the national industry showed a fall of 11.5 percent a year, the worst month for the sector in the last decade. Different economists who criticize the management of Cambiemos attributed the collapse to a drastic gathering of the domestic market, a product of the inflationary process that does not stop and the loss of purchasing power of the vast majority of Argentina.

This difficult scenario must add to the unusual policy of the Central Bank that has raised interest rates from the cloud, which allows access to financing of companies virtually impossible. According to data released by the Indec Monthly Industrial Estimator (EMI), in September, the only subsector that showed improvement was the basic metal industry with 2.7 percent, while the textile industry, for example, fell by 24.6 percent; the printing and printing sector collapsed 21.6 percent); metalworking 20.5 percent and cars 15.7 percent.

Industrial sector employers warned several times about the serious risk set by the policy initiated by Casa Rosada, which increased funding costs, which made it difficult to maintain the production rate. But, in addition, the national executive body also adopted measures that led to a collapse of domestic demand, which, as expected, had a strong impact on the national industry that had already suffered inflationary attacks.

According to official data, oil production fell by 11 percent; rubber and plastic of 20 percent; and chemicals and products 4.7 percent. The output of non-metallic minerals related to construction, in turn, fell by 3 percent.

The problem is that distrust in the national economic model is no longer based on presumption, but on results that are in sight. It is not surprising that consultations with representatives of industrial companies from across the country made by Indec in the works carried out for the preparation of the Monthly Industrial Estimator, in order to inquire about the prospects for the last quarter of domestic demand, 60.7 percent of the responses reflects a pessimistic look, that there will be a fall; while 30.5 percent of respondents think that a stable rhythm will be maintained; and only 8.8% expect an increase in industrial activity.

On the other hand, among exporting companies, 54.7 percent of respondents do not believe that major changes will occur until December; while 28.6% expect growth; and 16.7% think that a new fall will occur. The Argentine Industrial Clothing Chamber (CIAI) warned this week that the discount rate of the current account for small and medium-sized enterprises reached 64.5 percent on an annual average in September, according to the Central Bank of the Argentine Republic (BCRA).

With this scenario, today in Argentina there is no productive developmental capability. Entit observed, on the other hand, that the national government's decision to dollarize tariffs for gas, electricity and fuel, combined with a reduction in subsidies, generated a high input price; and noted that in the second quarter of this year, with the decline in sales and exports of local garments, domestic apparel production fell 1.8 percent year on year.

Also, according to a report released by the Construa Group this week, sales of inputs for construction activities fell by 17.3 percent in October, showing a fifth consecutive drop to date this year. Most economic analysts agree that in the coming months the crisis will deepen and, the more regrettable, this will result in new job losses for Argentina.

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