MercoPress. South Atlantic News Agency

Argentina's industrial activity keeps dropping

The sharp drop can be partly explained by last year's “soybean” dollar boosting sales abroad

Despite victorious announcements from President Javier Milei's government, industrial activity in Argentina fell for the tenth consecutive month amid a growing loss of purchasing power. Interannually, a 17.2% drop was recorded after March's 4.7% decline. In addition, the first quarter of 2024 showed a year-on-year 11.7% slide.

Fewer working days and one-off issues in some sectors contributed to the poor performance in March, it was explained. The UIA also warned April data could show “a slight improvement compared to March, which was at a very low level” but the year-on-year fall would nevertheless continue.

The automotive sector recorded its fifth annual fall and registered one of the largest decreases in March: 29.4%, driven ”by a lower level of sales both to the domestic market (42.2%) and exports (27.6%).” Also affected were non-metallic minerals (41.2%), affected by construction, and basic metals (27.4%), due to the drop in steel production and the six-day strike of workers in the sector. In addition, the downward trend in metal/mechanics (17.7%) deepened, with a contraction in all items. Food and beverages fell in March (10.2%). In the first three months of 2024, the sector accumulated a drop of 5.9% compared to the same period in 2023, while without the oilseeds complex it accumulated a decrease of 10.7%. Paper and cardboard production fell by 8.5% year-on-year, with packaging paper production driving the overall decline, followed by printing paper. In turn, the chemical products segment fell again year-on-year (7.2%), due to the decrease in the Other chemical products segment (11.0%) as a result of a lower performance in the demand for paints, cleaning, and hygiene products and medicines.

“The industrial sector is facing certain difficulties within the framework of the drop in demand and construction levels, as well as the rise in costs,” the UIA report stated.

Electricity demand among Large Industrial Users dropped by 9.5% yoy while imports from Brazil went down 34.1% interannually with exports growing by 36.7%. Agricultural machinery patents continued their downward trend and recorded a 27.8% fall.

The sharp interannual drop can be explained because the administration of then-President Alberto Fernández implemented the export-boosting soybean dollar last year.