Volkswagen's Brazilian unit is putting workers on a 20-day furlough, citing reduced demand from Argentina, which is undergoing an economic crisis that has derailed growth and slashed spending power.

"While the Brazilian market is growing in 2018, exports to Argentina have seen a momentary reduction," the company said in a statement cited by Reuters. Argentina is the top export destination for Brazilian-made cars.

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The furlough will affect workers from Volkswagen's Taubate factory, in the state of Sao Paulo, which employs 3,500. The company would not say exactly how many employees will be put on furlough.

Reuters noted furloughs are common in Brazil where labour laws are very strict, making layoffs more costly. This is at least the second time that VW has put some of its workers on furloughs to slow production this year.

Taubate plant produces the Up, Gol and Voyage.

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