After a severe currency crisis, emergency interest rate hikes by the Central Bank and a USD57bn IMF funding arrangement, we argued earlier this fall that the worst was yet to come for companies. We now see that they are starting to pay the bill of the financial shock through the resulting spike in inflation (hindering demand prospects) and high interest rates (raising borrowing costs). September data show the largest year-on-year (y/y) drop in industrial production since 2012, at -11.5%. The contraction was broad-based. Some of the decline owes to this year’s historical drought which affected the production of agricultural machinery. More generally, the production of companies has been suffering from lower current and expected demand. For instance, car sales over twelve months dropped in September (-3% y/y) and October (-9.4%). Besides, the monthly construction index registered a -4.1% y/y fall in September, the sharpest decrease since early 2017. Going forward, the recession will make the life of corporations increasingly harder.
