MercoPress. South Atlantic News Agency

Argentina's economy contracted 5,4% and unemployment reaches 10,4% in first quarter

Argentina's industrial output crashed 33.5% in April, the sharpest drop since the 1990s, stats office Indec said

Argentina's economy contracted 5.4% in the first three months of 2020, the government statistics agency said on Tuesday, the worst quarter in a year as the major grains and oilseeds producer was sideswiped by the impact of the global coronavirus pandemic.

Argentina already mired in recession for two years, and with a stagnant economy since 2012, faces an even deeper economic contraction ahead, with economists forecasting a full-year drop of over 10% after authorities imposed a tough lockdown in mid-March.

Argentina's industrial output crashed 33.5% in April, the sharpest drop since the 1990s. Stats office Indec also said that unemployment in the first quarter of the year rose to 10.4%, a rise of 0.3 percentage points year-on-year and of 1.5 points from the last quarter of 2019.

The lockdown, which remains in place in the capital Buenos Aires and the surrounding metropolitan area, has hammered domestic demand and forced the government to hike public spending in order to stave off rising poverty.

That has inflated the fiscal deficit, with government tax revenues tumbling, a concern for the country's center-left government as it looks to right its finances and restructure debts that it cannot currently pay.

Argentina, Latin America's no. 3 economy, is nearing 50,000 confirmed cases of novel coronavirus infections with over 1,000 deaths, while new cases have risen steeply over the last month.