Argentina's industrial, steel output still shrinking; government, analysts disagree on how much

Argentina's government announced Thursday that its index of industrial production fell 0.9 percent in March from a year earlier and by 1.1 percent from February, due largely to the struggling steel and automotive sectors. However, these rates of decline are considerably slower than those reported by independent analysts.

According to Indec, Argentina's state-run statistics agency, steel and aluminum output decreased a combined 39 percent in March, while automotive production dropped by 19 percent. In the first quarter overall factory output fell 2.3 percent in seasonally adjusted terms, Indec reported.

However, private analysts say industrial production is falling more quickly than the government reports. The FIEL research foundation said industrial production fell 13.1 percent in the first quarter, and 8.9 percent in March, both from a year ago.

According to FIEL's report, released Wednesday, Argentinean steel production shrank 38.4 percent in March compared to the same month last year, while in Q1 the drop reached 32.4 percent (other agencies report slightly differing figures for March; Center for Industrial Steel (CIS) reported a March drop of 41.5 percent and a Q1 drop of 41.7 percent y-o-y). FIEL explained that the steel sector underwent an expansion process during the first three quarters of 2008 due to large investments that increased production capacity. However, during Q4, activity levels were harshly affected by the global financial crisis, in particular, the automobile industry.

“The industries with the highest drop rates were: steel, automotive, metal-mechanic, chemical inputs and processing. The ones better resisting the actual economic conditions are food and beverages and cigarettes,” explained the foundation. “We expect production to stabilize when sales and inventories meet at a new equilibrium point.”