Editorial
VIA PAÍS – The economy is collapsing at the rate of business failure, rising unemployment and the expansion of hunger, with Argentina heading to record the worst decline in four decades in 2020.
It is still early to know if the domestic economy will fall more or less than those of countries with more loose or short quarantines. But no one doubts that the landing is being violent, with a huge burden on the population.
The International Monetary Fund (IMF) worsened its forecasts. In the virtual Spring Assembly, he said that Argentina’s GDP will fall 9.9%. A more negative forecast than the drop of 5.7% that was estimated two months ago.
The agency predicted that the recession will be more severe in all of Latin America, with the worst performance since 1980. Mexico will fall 10.5%; and Brazil, the largest in the region and Argentina’s main partner, will drop 9.1%.
President Alberto Fernández is convinced that the problem is not whether the economy is going to fall or not, but with how many killed by Covid-19. This was answered yesterday by a close associate of the head of state to this medium when asked about the IMF’s forecasts.
And in this sense, he pointed out the projections for Spain (-12.8%), Italy (-12.8%), France (-12.5%), the United Kingdom (-10.2%) and Brazil. “Of those countries, the one with the fewest deaths already registered 28,000. It is what we seek to avoid here, ”they said at the Casa Rosada.
Forecasts indicate that very few countries will grow this year: China 1% and Egypt 2%. In the rest, the point is how much each will fall. And for Argentina, an aggravated scenario is configured because it comes from falling 2.2% in 2019 and 2.5% in 2018. And from a stagnation that is already historic.
According to Indec, Argentine GDP (in billions of pesos at constant 2004 prices) was similar in the first quarter (with only twelve days of quarantine) to that recorded in the fourth quarter of 2007. In the middle, 13 years were lost, with the economic indicators drawing a vertiginous saw.
In addition there are serious structural dramas. A study by the entity Libertad y Progreso indicates that just 1.5% of the 600,000 companies in Argentina exported in 2019. In Spain (with a similar population), they export some 200,000 (6% of the total).
The weight of the AMBA and the next quarantine
For the economist Fausto Spotorno, the floor of the activity crisis was in April and a rebound began to be seen in May, as the quarantine became more flexible. According to the Ministry of Social Development, the activity is already enabled by 85%.
However, this official figure will be modified again in July. It is that the Buenos Aires Metropolitan Area (where 34% of the population resides) will enter a new phase of almost total restriction to try to stop the Covid-19.
Precisely, since the IMF forecast does not take into account the extent and depth of the quarantine in the AMBA, the GDP could fall more than the projected 9.9% and even exceed the 10.9% collapse recorded in 2002.
The FIEL Foundation indicated that despite the restart of some activities, the manufacturing industry sank 19.9% annually in May and accumulates a drop of 10.6% since the start of 2020. “An eventual decline in insulation will delay the rebound “He added.
Spotorno, director of the OJF Center for Economic Studies and staff member of the Universidad Argentina de la Empresa (UADE), told this newspaper that this year at least 20,000 companies and 200,000 private registered jobs will disappear.
Kristalina Georgieva, managing director of the Fund, said yesterday that Latin America has been hit “particularly hard” by the pandemic, but noted the “rapid response” by the countries, highlighting fiscal and central bank measures.
Along the same lines, the Government indicated to this media that the fiscal effort will exceed one billion pesos this year. The Central Bank specified that since March the financial system approved loans with a subsidized rate of more than 325,000 million pesos.
This contribution of the State to the economy will be completely covered with monetary emission, given the collapse of the collection. Without going any further, May was the month with the largest fiscal deficit since the hyperinflation of 1989.
Economist Gustavo Lazzari, a critic of the Government, opined that “there are countries that fall, like the Soviet Union, after a long involution. Others, like Argentina, collapse from a particular problem such as hyperinflation or a strong recession. ” And, according to his forecasts, that process has already begun.
