Summary of the Argentine industrial Crisis – January 2025
This article details the significant struggles facing Argentine industry, notably under the first year and a half of President Milei’s administration. Here’s a breakdown of the key points:
1. Widespread Business Closures & Job Losses:
* More companies have closed than opened in Argentina since Milei took office (17,063 net loss, averaging 28 per day).
* This has resulted in a loss of 236,845 jobs.
* Construction and manufacturing are the hardest-hit sectors, remaining considerably below 2023 averages.
2. Rising Crisis Prevention Processes (PPC):
* Companies are increasingly utilizing PPCs (aimed at avoiding layoffs/suspensions) – 143 in the first ten months of 2025, exceeding the total for 2024 and reaching levels not seen since 2018-2019.
3. Echoes of the 1990s:
* The current crisis is being compared to the 1990s, when opening imports led to the closure of many domestic companies unable to compete.
* The head of the Argentine industrial Union (UIA), Martín Rappallini, acknowledges the need for Argentina to compete globally but stresses the need for policies to address cost disadvantages.
4. High Production Costs:
* Producing in Argentina is 25-30% more expensive than in Brazil due to tax pressure, infrastructure deficiencies, and labor legislation.
* Installed capacity in manufacturing is low (61.1% in September), almost matching pandemic levels.
5. Textile Sector in Crisis:
* The textile sector is particularly vulnerable, operating at onyl 44.4% of capacity.
* It’s struggling to compete with cheap clothing imports from China, facilitated by online platforms like Temu and Shein, frequently enough entering the country without taxes.
* Approximately 15,000 formal jobs have been lost in the textile industry.
6.consumer Behavior & consequences:
* Argentines are enthusiastically embracing online shopping for cheaper goods, but this is contributing to job losses in domestic industries, particularly small and medium-sized businesses.
7. Government Plans & Outlook:
* milei plans labor and tax reforms intended to benefit businesses.
* However, the article suggests that without an increase in consumer purchasing power, the difficulties faced by manufacturers will persist.
In essence, the article paints a picture of a struggling Argentine industry grappling with economic policies, global competition, and internal cost disadvantages, leading to business closures, job losses, and a sense of crisis reminiscent of past economic challenges.
