Argentina's economy contracted 10% in 2020

[sandensea]

Argentina's economy shrank by 10% in 2020 due to the coronavirus pandemic, according to initial estimates published this week by the INDEC statistics bureau.

The economy fell by 2.2% in December, from the same month last year - although GDP was up by 0.9% from November.

December was the eighth straight month of recovery from the lows registered in April - when the economy was badly hit by the coronavirus pandemic and strict lockdown imposed by the government to tackle the spread of the Covid-19.

A year to forget

The 2020 recession was the worst since the country's post-convertibility crisis in 2002.

This also marked the third straight year of recession in Argentina - with GDP falling 14.1% since a debt bubble collapse known as the "Macrisis" began in April 2018.

The worst-hit sectors were tourism (down a staggering 48.6%), and community, social and personal services (down 37.5%).

Construction fell 25.3% - though the sector recorded 6.3% growth in December, from a year earlier.

Manufacturing shrank 7.8% - but was likewise up 4.5% in December. New car and truck sales plunged to the lowest level since 2004: down 25.5%; though only 3.6% in December.

Only two sectors - finance (up 2.1%) and public utilities (up 0.8%) - grew in 2020.

Agriculture slid 6.8% from record harvests in 2019, with exports down 13.2% by volume due mainly to lower global demand.

The country's trade surplus thus slipped to $12.5 billion, from a near-record $16 billion in 2019 - leading to a loss in central bank reserves of $5.4 billion as foreign debt service again outstripped trade surpluses.

Stimulus measures helped push federal budget deficits up 180% (97% in real terms) to 2.3 trillion pesos ($31 billion), though the successful refinance of $66 billion in foreign debt eased interest outlays by 25% (47% in real terms).

Inflation slowed by one third to 36.1% in 2020 - while real wages slid 2.3% (after falling nearly 20% in 2018-19). Unemployment (11.7%) rose to its highest in 15 years.

At: https://www.batimes.com.ar/news/economy/indec-estimates-economy-contracted-10-in-2020.phtml

Construction cranes rise from a work site in Buenos Aires.

Though the 10% fall in Argentina's GDP was the sharpest since the 2002 crisis, a steady recovery since the depths of the Covid-19 lockdown in April led to signs of growth by December - particularly in construction.

[Judi Lynn]

1. It's a welcome sight, to the former victims of the fascist Mauricio Macri. New life in the cities.

This wouldn't be happening had Alberto Fernández not won the election recently, and valunteered to start rebuilding the country, restoring public services, made it possible for people to see enough progress out of the ditch to start hoping again.

It's a real surprise Macri is still in the country. He just may bolt at any point if he gets a hint the investigators are finally closing in around him and his collegues in crime.

Symbols can bring renewal of faith, as we've seen throughout history. Restoring old buildings or building new ones will definitely give spirits a boost now, when the world really could appreciate the thought of rising above the struggle, at long last.

Thanks, sandensea!

[sandensea]

2. Thank you for taking the time, Judi - and for your positive thinking

I know economic data can be boring - though you certainly navigate through it all quite well.

These last 5 years have surely been difficult for Argentina - as well as for Brazil, and (to a lesser extent) other countries in the region.

In Argentina's case, they got derailed starting in 2012 with vulture fund attacks on its bonds - which effectively cut the country off from foreign credit, and scared off a lot of investment both foreign and domestic.

This forced Cristina Kirchner to impose currency controls - which slowed the economy further (she had no choice).

But of course, Macri's dictatorship-style debt bubble was the real coup de grace.

Debt crises can sink developing countries for years (a whole decade, often), since these debts require hard-to-earn dollars to service.

That said, Martín Guzmán's successful refinance of a third ($66 bn) of the foreign debt last August, certainly helped brighten the horizon - and the economy's responding (much to Clarín's chagrin).

Guzmán's now trying to refinance the $45 billion Macri borrowed from the IMF - which the IMF was basically forced to lend to Macri by Trump (one of the biggest Trump scandals no one's talking about). But without Biden's ok, the IMF won't agree to a refinance - and neo-cons are pressuring him not to.

So we'll see.

Thanks as always for your time and input. Stay warm, and have a nice and restful weekend Judi.