Industrial production fell 16.6 percent in April compared to the same month last year and accumulated a decline of 15.4 percent in the first four months of the year, according to Indec. The data is in line with the advance of private forecasts that warned that it was premature to indicate that the economy is recovering, as the Government presumes. In just four months, several branches of activity fell as much or more than at the beginning of the pandemic 2020, the only recent period with which the current deterioration can be compared. The inter-monthly variation showed a timid positive 1.8 percent.
“We are in clear recovery,” said the Minister of Economy, Luis Caputo, the same Wednesday that Indec published its report, before an auditorium full of businessmen and entrepreneurs at the opening of the 10th Latam Economic Forum. “There are quite eloquent signs of a recovery”, he corrected although he did not provide details of what they were. The truth is that almost no economist foresees a quick improvement in activity: the three main sectors of the economy – commerce, construction and industry – show a still worrying trajectory (see the reports by the Orlando consulting firm J. Ferreres and FIEL surveyed by this diary).
In particular, the diagram that industrial production has been drawing is more in the form of a inverted square root than a short V: the collapse in March (21.4 percent year-on-year), was followed by another slightly less pronounced one in April (16.6 percent) and activity could level off in June at levels even lower than those of 2023 The latter judging by the expectations of businessmen also surveyed by Indec (54 percent of those surveyed believe that domestic demand will decrease between May and June). And due to the fact that the inter-monthly recovery in April versus March has not yet gained strength: it was 1.8 percent positive.
In April 2024, all sixteen divisions of the manufacturing industry presented year-on-year declines. In order of their impact on the 16.6 percent of the general level, the following stand out: Food and drinks with a decrease of 9 percent, Machinery and equipment 29 percent, Non-metallic mineral products fell 35.2 percent year-on-year and Basic metal industries 19.3 percent.
The case of Food and Beverages is paradigmatic because even in the pandemic, sales of such an elementary branch have not narrowed: so far in Milei’s government in 2024, however, it has accumulated a drop of 8.2 percent. The production and sale of beverages does not find a floor. The collapse in the production of agricultural machinery (by 36.5 percent in April) explained the poor performance of the segment. Meanwhile, non-metallic minerals and metalworking fall at the rate of deterioration in construction, and other sectors such as automotive and appliance manufacturing.
Regarding their impact on the total, they were followed in relevance by the branch of Substances and chemicals which decreased by 10.2 percent, Furniture and mattresses by 35 percent year-on-year, Other equipment, appliances and instruments also by 35.5 percent, Wood, paper, publishing and printing by 13.7 percent, Rubber and plastic products 22.9 percent. They are all chilling numbers. The production of Metal Products lost 18.9 percent in April, Clothing, leather and footwear were down 15.4 percent versus the same month in 2023, Vehicles and auto parts down 13.6 percent, Textile products down 26 percent. .2, Tobacco Products 26 percent, Oil Refining and others 3.3 percent and Other Transportation Equipment 4.7.
It is difficult to imagine a quick recovery of the industry with these magnitudes of contraction in activity at the end of April. In the accumulated of the first four months of 2024, the industry fell 15.4 percent year-on-year, a variation only comparable to the accumulated fall in the first five months of the 2020 pandemic, which was 16.1.
