2023 was a bad year for the industry, with a decline in activity of 1.7%, according to the Industrial Production Index of the Ferreres Study. The survey shows that manufacturing production contracted in December 6.4% compared to the same month last year.
December it was the steepest decline for this indicator since December 2020.
“Industrial activity closed the year in negative, accelerating its contraction process. After the jump at the beginning of the year, the general trend of the sector was one of decline, leading to a contraction of 4.5% on a quarterly basis in third quarter, to which is now added a decline of 1.8% in the fourth quarter compared to the previous one,” the report indicates.
Among the rumors, he surprised in December the strong contraction shown by the base metals sectorwith a loss of 25.8% per year, followed by new declines in the food and non-metallic minerals sectors, the two sectors that recorded the largest declines in cumulative data for the year.
Barriers to importing inputs are the main cause of the December decline. According to the Argentine Chamber of Steel, the difficulty in accessing production factors and imported raw materials, which has been recurring for more than six months, has ended up having an impact on the production activity of the sector.
“The outlook for 2024 is not good: “Domestic consumption will remain at low levels for at least several months, influencing aggregate demand, and doubts remain about the evolution of various industrial sectors in the economic and production model promoted by the current government”, underlines the Ferreres Studio.
One of the most drastic declines of the year was in the food sector, which recorded an 8.8% decline in December, the thirteenth in a row. This adds up to a contraction of 8.2% for the 2023 total.
Here the drought had a central effect. As in previous months, the low level of activity in the mills due to the lack of grain was the key factor explaining the decline.
It adds to this a contraction in cattle slaughter of 11.2% annual, in a context in which producers have limited supply due to the uncertainty of the change of government, macroeconomic announcements and the devaluation of the peso.
For its part, the automotive sector, production showed a decline in the annual comparison of 0.4% in December, reaching a total of 610,715 vehicles, 13.7% more than recorded in 2022.
For SMEs the situation is more complex. The production of small industries according to CAME data decreased by 26.9% on an annual basis in December and closes 2023 with a decline of 2.6%.
“The significant depreciation of the currencythe increase in inflation after the elections and changes in import regulations, which prevented purchases for a few weeks, among other things, created an environment characterized by high uncertainty and decreased consumption, factors that hindered production levels in the manufacturing sector as a whole” , claims CAME.
Furthermore, they specify that due to the increase in prices there have been periods without quotes, “with high rates of input shortages, this has led numerous companies to suspend operations for a few days or to bring forward their employees’ holidays.
In December, 53.4% of industrial SMEs reported difficulties in replenishing inventories, especially in the procurement of raw materials and inputs.
Source: Clarin
