July 12, 2020

The Argentine economy collapses 26.4% in April, hit by COVID-19

Economic activity in Argentina registered a year-on-year collapse of 26.4% last April, an unprecedented drop in the South American country and reflecting the paralysis caused by isolation measures to try to stop COVID-19 infections.

The data released this Monday by the National Institute of Statistics and Censuses (Indec) and which serves as a provisional advance to measure the quarterly variation of the Gross Domestic Product (GDP) even exceeds the 16.7% collapse registered in March 2002, in the peak of the severe economic and social crisis that erupted in late 2001.

According to official figures, the index that measures economic activity monthly registered a drop of 17.5% in April compared to last March.

In the first four months of the year, the indicator accumulated a year-on-year contraction of 11%.

With the year-on-year collapse registered in April, economic activity accumulated nine months in decline in Argentina, after the slight advance of 0.4% verified in July 2019.

The Indec report, which indicates that “the COVID-19 pandemic had a full impact on activity during April,” reveals that all of the fifteen productive sectors included in the measurement showed year-on-year drops in the fourth month of the year.


“Economic activity bottomed out in April. Construction, manufacturing and commerce show the most important collapses, but no sector managed to escape the general debacle,” consultant Orlando Ferreres & Asociados said in a report.

According to Indec data, the sectors that showed the greatest magnitudes of fall were construction (-86.4%) and hotels and restaurants (-85.6%).

However, the sectors that most affected the retraction of the general level of activity were, by their weight, manufacturing industry, which fell 34.4% year-on-year, and commerce, which collapsed 27%.

Even agricultural production, one of the sectors least affected by the isolation measures in force since March 20, also presented very negative numbers (-10.3%) given that the record production achieved last year affects the comparison.


The Argentine economy has been in recession for two years, with a fall in GDP of 2.5% in 2018 and 2.2% in 2019, but the effects of the pandemic will deepen the collapse.

The experts that the Argentine Central Bank consults every month for its expectations report predict that the economy of the South American country will collapse by 9.5%, although there are consultants who predict a greater fall, even higher than the historical collapse of 10, 9% registered in 2002.

“We expect activity to contract 11% this year, showing the steepest drop during the second quarter (-16% year-on-year, the biggest drop since records are available),” consultancy LCG said in a report.

Analysts consulted by the Central Bank project a fall in activity of 12% for the second quarter that is about to end, but expect a recovery of 5% in the third quarter.

However, LCG warned that a revival of activity “will ultimately depend on the extent of the quarantine”, which the Government has just extended, in principle, until July 17 and with greater restrictions in Buenos Aires and its periphery, “and what the degree of flexibility determined” by the Executive in the coming months.


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