The recession and the shutdown of the economy were more exposed this week when the official figures for two key sectors in the national productive framework were released, such as construction and industry, which reflected resounding falls in the first quarter of the year.
The data that reveals the stoppage in the economy not only appears in the numbers of Indec and entities and consulting firms that reveal the drop in activity throughout the country. Also in our Region, the recession is strongly felt and punishes productive and commercial sectors alike, hand in hand with inflation that is decelerating but still at very high levels, added to a loss of purchasing power of employees and independent workers that are It resembles the long months of pandemic and confinement that Argentines suffered just four years ago.
Indec reported this week that construction collapsed 42.2% compared to the same month in 2023 and in the first quarter it fell 30.3%. Added to this is that the industry fell 21.2% in the same period, and accumulated a decrease of 14.8% in the first three months of the year. Furthermore, for ECLAC, the Argentine economy will suffer a decline of more than 3 percent.
Regarding what is happening in our City, Federico Melia, President of the Chamber of Commerce, Industry and Services of La Plata, said that “in our City, despite the slowdown in the price index, liquefied salaries impact consumption. , with a marked decline in retail and industry.”
The latest report on the Price Index in La Plata, generated within the framework of the Agreement established by the La Plata Chamber of Commerce and the Sectoral and Territorial Laboratory of the Faculty of Economic Sciences of the UNLP, shows that the price index in La Plata registered a monthly variation of 6.3% during April, thus marking a continuous downward trend since December 2023. This decline is clearly observed when comparing the data of recent months, with 43.7% in December 2023, 27 .9% in January; 13% in February, 10.6% in March and, finally, the aforementioned 6.3% in April.
Meanwhile, for the head of the Economic Confederation of the Province of Buenos Aires, Guillermo Siro, “The situation of the private productive sector is very difficult due to the sharp drops in activity in the last two months of 2023 and the first quarter of the year. both in the City and throughout the Province, to which is added the drop in profitability, the excessive price increases of those who have a dominant position in the market, but also of the national State, which increases its taxes through rates, but also provincial taxes and municipal rates that in many places increased excessively.”
The crudest story was given by Valentín Gilitchensky, director of the La Plata Business Federation, “Sales fell this year between 30% and 60% depending on the sector, but we also have the problem of the increase in fixed expenses, such as public services. with increases of up to 600%, more salaries, rents.”
“La Plata commerce is experiencing a critical panorama but is trying to resist, although some are already closing or thinking about closing or holding on with savings. We believe that by the last quarter this situation could be reversed and that is the hope we are having,” explained the business leader.
Meanwhile, Melia added that “the price increases in our City since December 2023 amount to 69.9% at a general level and in contrast, salaries have registered a cumulative increase of 53.2%, data that reflects the fall in La Plata purchasing power. Furthermore, the drop in retail trade in the four months to date of the year was between 20 and 25%, with a slight rebound in April. Regarding the installed capacity of the industry, it is in the order of 65 and 70% and overtime, night shifts and production lines have been reduced. This determines that sales in the industry are 30% below. This decline is fundamentally marked by the low levels of automotive construction and patenting.”
Siro pointed to tax pressure as a great burden faced by SME companies. “Today the productive sector competes with the national, provincial and municipal states to capture the purchasing power of Argentine consumers and workers who are between eating, buying clothes or paying taxes, because they cannot do both.”
The strong economic adjustment implemented by Javier Milei’s government also meant that sales in businesses registered an average decrease of 16%. These indicators also showed declines compared to the previous month, with a fall of 6.3% in industry and 14.2% in construction.
In the first quarter of 2024, industrial production accumulated a drop of 14.8% compared to the same period of the previous year, marking the largest drop since April 2020. All industrial sectors registered declines in March, with production being the most affected. furniture (-40.4%), machinery (-32.6%), automotive (-24.7%), textiles (-22.9%) and food (-14.4%).
In the construction sector, shipments of asphalt, iron and cement decreased significantly in March, reflecting the impact of the stoppage of public works since last December. Private activity in construction was also affected, with 53.3% of companies predicting that the level of activity will not change in the next three months and 39% estimating a decrease due to the economic decline and instability. Of the prices. Among companies dedicated to public works, 64.4% believe that the level of activity will fall during April-June 2024, while 29.7% believe that it will not change and 5.9% that it will grow.
These indicators put the behavior of employment in their sights, when suspensions are already occurring in vital industrial sectors such as automotive and construction.
For now, the chainsaw and the blender helped close the macro numbers, but they fail to put the productive sectors in motion to stop the profound retraction of the purchasing power of employees and retirees, nor the fall in the labor market, which experts see reflected strong in future upward indicators in the labor market.
