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Construction: one of the “tractors” of the economy is slowing down and companies are holding on waiting for an improvement - Infobae
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Construcción: uno de los “tractores” de la economía está frenado y las empresas aguantan a la espera de una mejora
Hay poca actividad privada y es prácticamente nula la pública. Qué lectura hacen los empresarios y por qué la baja es tan profunda
www.infobae.com
March 25, 2024
There is little private activity and public activity is practically non-existent. What reading do businessmen do and why the decline is so deep
By Mariano Zalazar
There are few active works in the country compared to a normal year
Construction is going through a complicated present. According to the latest statistics from the National Institute of Statistics and Censuses (Indec), its activity level contracted 21.7% in January, after having fallen 12.2% in December and 2.1% in November. In addition, requests for surface authorization for new projects are decreasing and the volume of formally employed labor is contracting.
Faced with the question: To what extent is activity going to fall and if it will be able to react quickly when the economy begins to recover? Gustavo Weiss , president of the Argentine Chamber of Construction (CAC) told Infobae : “Construction historically hyperreacts to economic cycles. If the economy in general grows 3%, construction grows 9%, but if it falls 3%, we fall 9%.”
Gerardo Fernández , president of the Confederation of Construction SMEs of the Argentine Republic (CPC), also added his opinion : “Construction has always been the main engine of the economy. The idea is that the reaction occurs, the question is when and how many will survive when that vector is turned on again. There are many preventive contests throughout the country.”
As the businessmen expressed, the sector maintains expectations that the situation will improve , but the truth is that today the reality is very worrying and a rapid recovery is not in sight in the short term, both for public and private works.
“The situation is that national public works are completely stopped. There is practically nothing in execution because the problems of non-payment of old debt persist and the Government for now has no intention of restarting any work,” Weiss added.
In recent months, the amount of formal labor employed by the sector has fallen (EFE)
“Some provinces, especially the most important ones, have some public works activity, but not too much,” Weiss lamented.
Fernández, for his part, assured that the situation of public works is critical. “Official statistics do not reflect reality. Our present is much more serious than the numbers show,” he noted.
“The state of the sector is catastrophe. One has heard of other sectors, which have suffered activity declines of 30% or 40%, but in our case public works has dropped 100% for months. There is a catastrophic breakdown of contracts. It has made a disaster for SMEs. They are in the worst of all worlds and the interest rates to finance themselves are prohibitive,” stated the president of the CPC.
Gerardo Fernandez also explained that this situation is generating cuts in payment chains. “Labor relations with the corralones are being put in check. They are used to collecting cash in cash, but today that is impossible and when a supplier is told that he will be paid in 30 days or more, he feels aggrieved. The situation of SME entrepreneurship is very serious,” described the businessman.
Private work also hit
The businessmen told this medium that with the cut of funds by the national State, the activity associated with public works is practically nil. Now, as far as the private part is concerned, the scenario is somewhat different, although not very encouraging.“Private work has been seriously affected for many reasons. First, because there are many companies that are dedicated to both branches, and since they are not charging for their work for the State, they are left without financing to undertake private projects and vice versa,” Fernández remarked.
Likewise, the president of the CPC maintained that the real estate market is going through a very bad time, which of course has an impact on construction activity. “Due to market conditions, today the apartments whose construction cost USD 60,000 are being sold for USD 50,000. Until real estate values, which are very low, are adjusted, there will be no incentives to invest in the sector,” he lamented.
The works promoted by oil companies contribute to the maintenance of private sector activity (Reuters)
Gustavo Weiss was more optimistic, who acknowledged that the level of activity in private works is below normal, but clarified that it is not completely stopped. “Private work is always quite constant over time. Although horizontal property buildings are very slowed down, they are driving oil, telephone infrastructure and other sectors promoted by private companies. Those are generally more constant over time. The drop is lighter than public works,” he said.
“The informal market is the one that has slowed down a little more. The construction and renovation of single-family homes is operating at a very slow pace, due to the recessionary process and the rise in materials,” added the CAC representative.
Is the rebound coming?
For the representatives consulted, the outlook will depend on the speed with which macroeconomic variables are rearranged and some circumstances specific to the activity are stabilized. Specifically, they agree that public works will be reactivated only if the Nation so seeks, either through direct execution in the area of infrastructure or by granting financing to the provinces.Regarding the private part, the chips are mainly placed on greater price stability. “To the extent that the economy improves, there is more price stability, inflation goes down and people have additional weight in their pockets, we hope that activity will rebound,” Weiss stressed.
Fewer active companies
According to the Institute of Statistics and Registration of the Construction Industry (Ieric), there are currently 21,313 firms in activity, including construction companies and contractors. A year ago, there were 21,458 companies operating in Argentina, which means that over the course of twelve months, 145 companies throughout the country closed, or at least stopped being active.
Construction is expected to rebound quickly as the economy recovers (Reuters)
Infobae spoke with a businessman who is in bankruptcy proceedings and is initiating legal actions against the national State for the cessation of payments, and said: “I have not received anything for five months and I have no way to pay my costs. “I cannot cover salaries or debts with suppliers.”
And he added: “From now on I can only wait for the Government to have the good will to comply with the contracts and catch up quickly with payments. Otherwise we will not be able to continue in activity.”
Gerardo Fernández, from the CPC, assured that there are many cases like that, and complained against the actions of the Nation. “The Government speaks of a moral decadence, which we agree with, but non-compliance with contracts is also illegal and immoral. Furthermore, they talk about corruption, but because of four or five companies we all fall into the same bag,” denounced the businessman.
“There are hundreds of document letters sent and the first complaints have already been made (due to lack of payment from the Government). The problem is that the trials are resolved in seven years and in the meantime the SMEs close,” Fernández lamented.
