Business & Economy

Argentine economy shows signs of recovery at end of disastrous 2020

By Natalia Kidd

Buenos Aires, Mar 23 (efe-epa).- Argentina’s gross domestic product plunged 9.9 percent last year due to the nation’s coronavirus-triggered economic restrictions, although signs of recovery were apparent in the fourth quarter.

The data released Tuesday by the National Institute of Statistics and Census (Indec) confirm that Argentina suffered its biggest one-year drop in GDP since its 10.9 percent contraction in 2002, when the country was battling its way out of a four-year economic depression.

According to Indec’s report, the overall supply of goods and services plummeted 11.5 percent due to a 9.9 drop in GDP and an 18.1 percent plunge in imports.

Overall demand, meanwhile, plunged 11.5 percent, with gross fixed capital formation falling 13 percent and exports plunging 17.7 percent. Private and public consumption fell 13.1 percent and 4.7 percent, respectively, last year.

By sector, the data also reveal the dramatic effects of the restrictions that were first imposed on March 20, 2020, to contain the pandemic and started to be eased toward the middle of last year.

Among the country’s biggest industries, construction plummeted 22.6 percent, manufacturing contracted by 7.7 percent, agriculture shrank 6.9 percent and commerce fell 5.4 percent.

But other sectors that weigh less on overall GDP experienced an even more pronounced collapse, with hotels and restaurants, for example, suffering a 49.2 percent decline in 2020.

Slight growth was only seen in financial intermediation services, up 2.1 percent, and utility services, which expanded by 0.9 percent.

One silver lining in Tuesday’s report was a continued trend toward recovery in the fourth quarter, with GDP for that three-month period rising 4.5 percent relative to the third quarter.

And although fourth-quarter GDP fell 4.3 percent compared to the same period of 2019 (marking the 11th consecutive quarter without year-over-year growth), that contraction compares favorably to the second quarter of 2020, when the economy shrank a record 19 percent.

Argentina has been in recession for three years, its GDP having contracted 2.5 percent in 2018 and 2.2 percent in 2019.

But the economy is expected to recover in 2021, with the government predicting 5.5 percent growth and private economists projecting an expansion of 6.2 percent.

Economist Martin Calveira, a researcher at Austral University’s IAE Business School, said a “certain degree of recovery” is expected in the first two quarters of 2021 and that projections are for average inter-annual growth of 6.1 percent.

Nevertheless, “a worrying level of uncertainty” exists regarding the availability of Covid-19 vaccines and the management of the rollout process, the expert said. EFE-EPA


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