Argentina textile industry runs at 24% capacity as imports surge and output hits nine-year low

Argentina’s textile industry is posting some of its weakest readings in years, as a surge in imported finished garments coincides with a steep drop in domestic output and capacity use, industry groups said.

The textile industrial production index fell 23.9% year on year in January, the lowest level in the available series dating back to 2016, according to a March report by the Argentine Textile Industries Federation (FITA). FITA said the decline was driven by drops of more than 30% in segments such as “fabrics and finishing” and “cotton yarns,” contrasting with a milder 3.2% decline in overall manufacturing.

The downturn has been building. The Pro Tejer Foundation’s economic bulletin said textile production was down 27.8% compared with two years earlier. Capacity use underscores the contraction: in January 2026, the sector operated at just 24% of its productive potential, far below the economy-wide industrial average of 53.6%, according to the same sources.

Industry groups said the slump is also showing up in employment. Textiles, apparel, leather and footwear shed 12,000 formal jobs over the past year, totaling 100,000 positions as of December 2025, they said. Since late 2023, the accumulated losses exceed 20,000 jobs, and Pro Tejer said the sector posted the largest percentage employment decline across Argentina’s private economy.

The deterioration at home has unfolded alongside fast growth in online retail. Argentina’s e-commerce market expanded 55% in 2025, outpacing inflation of 31.5%, industry data cited in the reports showed. But the growth has been increasingly driven by purchases from abroad, a trend that now includes 47% of online shoppers, according to the latest annual e-commerce study by the Argentine Chamber of E-Commerce (CACE) and Kantar.

In that survey, Temu was the most used platform among consumers who buy from overseas, at 41%, followed by Shein at 31%, ahead of traditional players such as Amazon, the study showed.

Local brands have felt the shift in demand, industry sources said. E-commerce platform Tiendanube reported nominal revenue for non-sports apparel fell 14%, which it linked in large part to the rise of Chinese platforms. The Observatorio Pyme Foundation said 88% of small and mid-sized firms in the segment cited falling sales as their main problem, while 68.4% said they faced an “import threat,” the highest reading across industrial sectors.

Imports: finished goods up, production inputs down

Foreign trade data points to a structural split. FITA said imports of final products, particularly clothing, rose 54% in volume and 27% in value in February. Over the first two months of the year, imports of finished apparel jumped 82% in tonnes and 53% in dollars, it said.

Datamar container movement data reveals a 39% surge in inbound TEU volumes within Argentina’s fabric garments during January and February of 2026. The following provides a detailed breakdown of these import trends:

Fabric Garments Imports | Argentina | Jan 2023 – Feb 2026 | TEUs

Source: DataLiner (click here to request a demo)

At the same time, imports of key inputs needed for local production, such as yarns, raw materials and fabrics, fell more than 35% in volume and more than 50% in value, FITA said, arguing the pattern suggests factories are buying less because they are producing less, while domestic demand is increasingly met by foreign goods.

FITA also warned of growing under-invoicing in textile imports, saying more than 70% of incoming products were declared at values well below historical references and, in many cases, below the cost of the main raw material. FITA cited cases such as cotton T-shirts imported for less than $0.01, towels below $0.30 per kilogram and jeans below $1, calling the practice a source of market distortions and unfair competition for local producers.

Pro Tejer said that in the first 10 months of last year, total textile and apparel imports reached 332,696 tonnes, up 89% year on year. Within that, made-up goods rose 217% and garments 166%, setting record highs in import volume, it said. Observatorio Pyme added that 37% of industrial SMEs reduced their share of the domestic market due to foreign competition, the highest since 2007, and said China was identified as the main source of the import threat by 73.3% of firms.

Prices have not kept pace with the strain on producers, the groups said. The “clothing, leather and footwear” category posted no monthly change in February 2026, but Pro Tejer said the slowdown reflected negative profitability, with many sales taking place below cost amid weak consumption and demand shifting toward imports.

Source: Forbes Argentina

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