Development: On 5 October José Ignacio de Mendiguren, the president of the Argentine union of industrialists (UIA), said that “two or three weeks ago, we started feeling the [world economic] problem at home, in the region, in a country like Brazil, which is very important to us”.
Significance: De Mendiguren’s rapid change of heart over whether the Argentine economy is “armoured” against the global economic crisis came after two important manufacturers, Fiat and Alpargatas, announced the temporary closure of factories in Argentina citing a slow-down in the Brazilian market, the main export destination for Argentine industrial products. Although Fiat quickly revoked its decision to suspend production in its Córdoba factory citing Brazil’s decision to lift the temporary license requirement on 12,000 cars stuck at customs, the Argentine automotive and textile industries are bracing for the effect that a slowdown in Brazil could have on their business.
Key points:
• The once Argentine-owned textile giant Alpargatas is now controlled by Sao Paulo Alpargatas, which is in turn owned by the Brazilian conglomerate Camargo Correa. The company said that lower than expected sales in the Argentine and Brazilian markets had led to an accumulation of extra stock, which forced it to suspend 2,500 workers from its six factories in several Argentine provinces until 10 October.
• The governor of Tucumán, José Alperovich of President Cristina Fernández’s Frente para la Victoria (FPV), said that the decision, which affected 1,317 people in that province, was the result of problems in Brazil. “If the crisis affects Brazil, if Brazil is doing badly, we will feel the backlash”, he told the local media. His comments contradicted those made yesterday by Fernández herself, when she said Argentina has a “very firm [economic] standing”.
• According to the September report by the association of Argentine car manufacturers (Adefa), vehicle exports to Brazil dropped 19.3% month-on-month in September and 11.4% when compared with the same month of 2010. According to Adefa, 81.2% of Argentine vehicle exports go to Brazil, followed by the European Union, Mexico and Uruguay.
• Nonetheless, Adefa reports that domestic car purchases registered a 2.4% increase month-on-month in September and a 30% increase against September 2010. According to this figure, 40% of the Argentine demand was met with nationally-produced vehicles.
