Argentina’s manufacturing sector is feeling the heat of President Javier Milei’s radical economic reforms. The industry has shrunk by 11.6% in the first ten months of 2024, reflecting the broader economic upheaval. This decline comes as Milei implements his “shock therapy” approach to fix Argentina’s ailing economy.
Milei’s stabilization program, launched in December 2023, aims to balance the budget and stop printing money. These efforts have produced some positive results, including Argentina’s first fiscal surplus in years. However, the manufacturing sector is bearing the brunt of these changes.
Seven out of nine industrial sectors reported declines in October 2024. The minerals and basic metals industry was hit hardest, contracting 13.7% year-on-year. This aligns with Milei’s push for deregulation and market liberalization.
Argentina’s manufacturing sector shows some bright spots amid the overall decline. The food and beverage industry, Argentina’s largest, grew 6.9% over the past year. This sector accounts for about 30% of total industrial production and 9% of GDP.
The automotive industry, the country’s third-largest manufacturing sector, increased by 5.2%. It drives 10% of industrial production, 10% of exports, and 3% of GDP. These growth areas align with Milei’s investment attraction efforts and offer hope for economic recovery.
Manufacturing Down 11.6% in 2024, Yet Key Industries Show Resilience
The manufacturing sector’s performance is crucial for Argentina’s economic health, accounting for over 17% of GDP. Its struggles raise concerns about job losses and reduced output. However, Milei’s reforms aim to create a more business-friendly environment in the long term.
Looking ahead, the sector’s recovery depends on the government’s ability to maintain fiscal discipline while controlling inflation and stabilizing the currency. The World Bank projects a 3.5% GDP contraction in 2024 but expects between 4% and 5% growth in 2025.
As Argentina pushes forward with its economic reforms, the manufacturing sector will be a key indicator of success. While challenges remain, there’s potential for recovery if Milei’s policies can attract investment and boost productivity.