Argentina construction activity slumps further as austerity drive bites

Argentina’s construction sector saw its losing streak worsen in January with a monthly activity decline of 10.2% and 21.7% year-on-year, as the austerity drive of President Javier Milei has halted thousands of public work projects. 

The month-on-month figure for December was revised from a drop of 8.8% to 9.4%, while the y-o-y decrease of 12.2% remained unchanged, the country’s statistics office Indec said in a report.

In January, asphalt sales were down 61.9% from a year earlier while the sale of plaster fell 40.6%. 

The embattled sector has now registered three consecutive months with y-o-y declines, and it is estimated that up to 3,500 public work projects have been halted since Milei took office on December 10. 

Milei has vowed to slash public spending on infrastructure to a minimum and leave it mainly in the private sector’s hands, though this approach has been questioned by construction firms and some economists due to lack of access to financing.

Argentine construction chamber Camarco declared a nationwide “state of emergency” last month and claims 100,000 sector jobs have been lost due to the austerity drive.

Construction firms have also been hit hard by rampant inflation. Last year inflation was 211%, while construction sector inflation in Greater Buenos Aires reached 223% and 355% in Mendoza.  

Pessimism remained high in January as 76% of companies focused on public sector works believed that activity would shrink over the next three months, compared to 77.4% in December, according to a survey by Indec.

Milei’s policy has put him on a collision course with several provincial governors, who previously relied on federal funding for many of their infrastructure projects.