Industrial crisis hits payment chains for nearly half of companies as debt rises

Argentina’s industrial slowdown is increasingly affecting companies’ ability to pay their bills. Nearly half of the firms surveyed by the Center for Studies of the Argentine Industrial Union, or CEU-UIA, said they could not fully meet at least one regular obligation.

The survey of more than 600 companies showed a further deterioration in activity in July, especially in the domestic market. Local sales fell at 49.7% of firms, while only 16.2% reported an increase. Production declined at 42.9% compared with the previous quarter’s monthly average, and improved at 20.9%.

Taxes and suppliers were the first links in the payment chain to suffer. Some 34.6% of companies could not fully meet their tax commitments, while 33.3% had trouble paying suppliers. Financial obligations affected 25.6%, public services 16.3% and wages 12.7%.

Overall, 47.6% of firms reported difficulty covering at least one regular payment, up from 44.9% in April. The share that struggled to meet all such payments simultaneously rose to 9.2%, from 6.1% in the previous survey and a historical average of 4%. That was the highest reading in the series. Among companies facing payment problems, the survey also found a greater need for financing, although the supplied article ends before giving the full figure.

Smaller companies faced sharper declines. Sales fell at 54.8% of micro and small firms, while 47.8% reported lower production. Falling domestic demand ranked as the main problem for 48.6% of companies, followed by rising costs at 24.2%. Energy costs gained importance and, for the first time, displaced domestic inputs as the second-largest concern after labor costs. Six in 10 firms also cited unfair competition and smuggling as having a high or very high impact, including imports sold at “artificially low” prices, missing certifications, weak traceability and sales without invoices.