Construction activity in Argentina fell 22% in January compared with the same month in 2023, and declined 10% in the month from December, says a report from Indec, the official compiler of Argentine statistics.
The deep recession comes after the country’s new far-right president, Javier Milei, all but cancelled public works amid skyrocketing inflation.
Indec measures physical inputs to projects, like Portland cement, steel, and bricks.
Asphalt use fell 62% in January, while plaster fell 41% and steel and iron fell 39%, it found.
Building permits fell 10% year on year.
No more public works
Javier Milei assumed office on 10 December and scrapped the Ministry of Infrastructure last month, transferring its responsibilities to the Ministry of the Economy.
His plan is to cut public spending on infrastructure to a minimum and encourage private sector investment instead.
Initially, Argentine business leaders, including the Argentine Chamber of Construction (Camarco), welcomed the plan.
“The country requires a clear path in economic matters, with long-term political consensus to abandon the period of stagnation and decline,” the chamber said.
But by January, Camarco president Gustavo Weiss was expressing concern at an “unprecedented crisis” and a suspension of public sector work that had generated unpaid invoices worth more than $30m among his members.
Wary investors
Investors are wary of bringing projects forward owing to Argentina’s high inflation.
The annual increase in the retail price index last year was 211%, with the construction sector in the Buenos Aires metropolitan area reaching 223%.
In 2024, the national rate is expected to reach 280%.
Weiss warned that public sector work wasn’t sufficiently profitable to attract the private sector.
“The government wants everything to be concessioned and the works to be done by private parties, but [former infrastructure minister] Guillermo Ferraro knows that there are works that cannot be done by the private sector because they are not profitable and the state has to address them,” he told news outlet Ambito.
Extraordinary legislative powers
Economic commentators expect that the government will try to bring inflation under control by taking demand out of the economy, although real wages are already at their lowest level since 2003.
This is likely to cause a rapid decline in capital spending, which tends to hit the construction industry first.
Beyond infrastructure, the government is bringing forward omnibus bills that will abolish or amend large areas of Argentine law.
A critical commentary on the programme, written by Argentine think tank the Centre for Social and Legal Studies, comments that the government is seeking a two-year period in which it can exercise extraordinary legislative powers.
The aim is to introduce market-based reforms into the healthcare, education and housing sectors while effectively outlawing public protest.
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