MercoPress. South Atlantic News Agency

Argentine SMEs losing ground to imports

Suspensions, early vacations, and layoffs were reported on the rise

A report by the SME Observatory Foundation (FOP) warned that one-third of Argentina's small and medium-sized industrial enterprises (SMEs) were losing market share to imports. The study, which surveyed 407 companies, found that 45% of SMEs feel a growing threat from imported goods, the highest level since 2007.

The textile and footwear industries are the most affected, with over half of these firms losing market share. China is perceived as the biggest commercial threat by 73% of SMEs, followed by Brazil at 16.6%. Many companies believe these imported products are either unfair or fail to meet technical standards.

Industrial employment has fallen for nine consecutive quarters, with a 4.7% decrease in the second quarter compared to the previous year. One in four companies has reduced its workforce.

The FOP attributes this trend to a combination of factors, including easier import policies, a lagging exchange rate, and high interest rates. Official data showed that imports in June totaled US$6.37 billion, a significant increase from the previous year, with consumer goods nearly doubling their share of total imports.

FOP head Federico Poli said this phenomenon can be explained by “a change in import facilities, an exchange rate that seems to be lagging, rising interest rates, and a lack of credit,” all of which “happened overnight.· In this scenario, ”you have no choice but to start importing.”

The Argentine Industrial Union (UIA) warned that rising domestic costs and competition from imported finished goods were harming domestic production. In the first half of the year, imports of consumer goods totaled US$5.268 billion, 32% more than in 2023, while industrial production fell 10% year-on-year.

General Business Confederation of the Argentine Republic (CGERA) President Marcelo Fernández noted that measures to lower inflation included eliminating protections and controls on imports, which “became dangerous” in the face of declining consumption. “This led to suspensions, early vacations, and layoffs,” he said.