Footwear in Argentina: consultancy firm forecasts growth in production and sales by 2022
The sectoral economic report was prepared in January 2022, by the consultancy firm IES -Sectoral Economic Research- and distributed to the press and industrial entities.
Among the main data, it indicates that in the first eleven months of 2021, footwear production showed a significant recovery, hand in hand with greater domestic demand and import substitution. The greater tariff protection by the government, added to the shortage of foreign currency for imports of final goods, were some of the reasons that drove the growth in production.
Between January and November of last year, production managed to show an annual recovery of 55.4%, to reach a total of 101 million pairs, compared to what had been 65 million in 2020. In this way, it is expected that the total production of footwear during the year 2021 ends with an expansion of 64.3% compared to 2020, reaching a level of 115 million pairs per year, the highest since 2015 to date.
According to Alejandro Ovando, manager of IES Consultores, "footwear production in Argentina showed a strong recovery in 2021, after five consecutive years of recession".
During the year 2021, the apparent consumption of footwear totaled 121 million pairs, which implied a strong increase of 51.8% compared to the 79.8 million pairs of the year 2020. The share of imports in apparent consumption decreased up to 17.1% between January and November, below the same period of the previous year, when they had been 18.8%. This can be explained by the greater restrictions on footwear imports and the drive to replace them with domestic production.
After five years of consecutive falls, consumption per inhabitant managed to make a strong rebound during 2021. In this way, it reached 2.9 units per person, with a recovery of 50.1%, returning to the levels that had been observed in 2018, although there is still a way to go if it wants to return to the levels of 2015.
The sector's foreign trade is traditionally in deficit, since it needs imports to cover domestic consumption, as well as supplies for the local production of footwear, while exports do not represent a significant proportion of both foreign trade and production.
In 2021, footwear exports totaled US$ 8 million and showed a significant recovery of 100% compared to US$ 4 million in 2020. Regarding foreign purchases, these also showed a recovery both in values and quantities, although they lost share of the domestic market. Thus, they reached US$ 308 million with a recovery of 18.2% compared to the US$ 260 million for the same period in 2020. The trade balance was negative by US$ 299 million and resulted in a 17% deterioration.
The report concludes by pointing out that "the footwear sector is expected to continue on a positive path in terms of production and sales, in the short and medium term of 2022".
"After the sharp drop in the sector in 2020, the stabilization of employment and income, together with the recovery of the economy in general and a quasi-normality in mobility, would boost the demand for footwear, sustaining the sector's recovery".
"In addition, profitability has improved substantially due to the increase in prices above inflation, as a result of higher levels of trade protection, which would also be a very important factor in the expected recovery going forward".
Source: IES Consultores/Argentina
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