Real investment in Argentina rose by 14.5% in September, driven by the purchase of imported equipment

Real investment in Argentina’s economy saw a 14.5% monthly increase in September, fueled primarily by a spike in imported equipment purchases. This growth follows a reduction in the PAIS tax rate for foreign-acquired goods.

These figures come from the Monthly Gross Domestic Investment Index (IBIM) by Orlando Ferreres consulting firm. According to seasonally adjusted data at constant prices (excluding inflation effects), this marked the strongest positive change since Javier Milei became president.

The primary driver was the imported durable production equipment sector, which posted an extraordinary 66.6% jump compared to August. It’s worth noting that many companies delayed their international transactions until September, following a government announcement that the PAIS tax on such transactions would drop from 17.5% to 7.5%.

Meanwhile, domestic durable production equipment rose by 1.3%, while the construction sector saw a 1.9% increase.

Year-on-year decline narrows

On a year-over-year basis, the index recorded an 8.3% drop, the smallest decline of the Milei era. Measured in dollars, estimated monthly investment reached $7.798 billion.

Investment in machinery and equipment rose 3.4% annually, returning to positive territory due to an 8.5% increase in national durable equipment sales and a marginal 0.2% annual decrease in imported machinery, a sharp contrast to August’s 42.8% contraction.

Construction investment declined 18.6% in September, reflecting a lesser drop than in August, though the sector remains slower to recover than others. Cumulative figures for the year show construction investment down 24.8% compared to the same period last year.

Investment outlook improves

Despite recent gains, IBIM data shows a 20.4% contraction in the first nine months of 2024. “Market sentiment improvements appear to be influencing investment decisions. National durable equipment purchases have grown for a third consecutive month, and imported investments are almost flat year-over-year, after plunging over 40% in August,” Ferreres reported.

“In the coming months, we expect further improvement in investment levels, supported by tax amnesty funds and, in the medium term, the anticipated success of RIGI. However, the capital controls still restrict foreign investment flows, so expectations should be tempered,” they added.

Source: Ámbito

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