This is expected by 78.9% of small and medium-sized businesses in the country local demand will decline over the next 90 days, as revealed by an investigation conducted by Industriales Pymes Argentinos (IPA). According to the body, this “will generate a sharp increase in the inactivity of the industry’s installed capacity and a reduction in staff, given the collapse of forecasts on hours worked”.
The president of the IPA, Daniel Rosato, warned that the loss of purchasing power of the population in general, and especially of workers, “will hit national production, which will be forced to adapt on all fronts, with the latent risk of closure of factories. “And he argued that “it is necessary for the national government to take note of this situation avoid the collapse of the internal marketwhich attacks private employment, which is the only one capable of supporting the contraction of the State proposed by President Javier Milei”.
“Industrialists’ expectations are very negative for the next three months, with a decline in consumption and the maintenance of restrictions on imported inputs, albeit with a moderate liberalization of imports of finished products, among other points consulted. We see that this is a very serious scenario,” she said.
The president of the IPA underlined that “the factory crisis will lead to the dismissal of staff due to the drop in production”, but clarified that “if the situation worsens, as expected by SMEs for the next quarter, it will become “the prelude to a massive factory closure, which will take years to recover from.”
The survey found that only 4.2% of respondents believe that “local demand will increase in the next 90 days”, while 16.9% are confident of sustaining verified activity until mid-January this year . The picture is completed by 78.9% who expect a decline in activity. This situation will result in the use of installed capacity of factories, as 67.6% expect a decrease; while 26.8% plan to keep the same machines used so far.
Regarding foreign trade, 32.4% of SME entrepreneurs expect this exports will remain identical; while 28.2% believe they will show a downward trend. 15.5% expect growth for the next three months; and the remaining 23.9% have no export activities.
In terms of imports, 76.1% of SMEs confirmed that they are currently affected by a lack of access to imported inputs. To the future, 45.1% of SMEs are preparing for a decline in purchases of production factors necessary for national production. On the other hand there are positive expectations of 26.8%, who expect an increase. A slightly lower share, placed at 22.5%, expected continuity in purchases made abroad until mid-January 2024.
The fear of Argentine industrial SMEs that the opening of foreign trade will result in an increase in imports of finished products for the next 90 days is moderate, as 40.8% of entrepreneurs interviewed believe that inventories will decrease; while 36.6% expect an increase. There, 22.5% expect the scenario to remain unchanged for the same period consulted.
The research predicts that 47.9% of small and medium-sized industrial companies expect an increase in credit needs in the next quarter; 29.6% expect a decline in this demand; while the rest of the sample expects it to be supported.
In terms of work, 56.3% of the SMEs interviewed foresee this Staff in the next 90 days will be affected. While 39.4% hope to be able to support their workforce. The effort they will make to retain their employees is reflected in the scenario of activity within the factories, because 62% expect that the number of hours worked in the next quarter will be reduced; and 32.4% believe they can support it.
Also from CADIEEL (Argentine Chamber of Electronic, Electromechanical and Lighting Industries), the companies expressed their opinion his concern about the situation of the domestic industry in relation to the DNU and the Omnibus law. “With the intention of working and finding solutions together that value work and equal conditions compared to other technology exporting countries, they affirm that it is necessary to resolve the imbalance generated by the PAIS tax for the production and positioning of Argentine technology in the market local and worldwide,” they explained in a statement.
SN
Source: Clarin
