Argentina's economic activity experienced an annual 20,6% fall in May moderating the collapse in April, following the quarantine measures implemented because of the pandemic. The data was released this week by Indec, the official stats office, and shows that economic activity in May actually recovered 10% compared to April.
However in the first five months of the year, the activity indicator accumulates a drop of 13,2%.
During April the year to year collapse was 26,3%, an unprecedented percentage as a consequence of the sanitary restrictions imposed by the government of president Alberto Fernandez. In May the lifting of some of the restrictions in certain regions of Argentina helped with the improvement of the overall activity.
In the majority of Argentina's districts there was a relaxation of circulation restrictions and the reopening of certain commercial and industrial activities in May which certainly helped to contain and make the fall more moderate than in April, but overall economic activity remains depressed, explained consultants Orlando Ferreres &Associates.
In fact with the year to year drop in May economic activity in Argentina completed ten months of recession following the mild advance of 0,4% in July 2019.
The Indec report shows that fourteen of fifteen sectors experienced slides during May. The areas with the steepest falls include, Construction (minus 62%), manufacturing (minus 25,7%), retail (minus 20,9%), mining and quarries ( minus 20,3%) and agriculture (minus 10,7%).
The only activity which experienced a year to year plus was fishing, with a plus 61.5% improvement.
However despite the overall recessive percentages, the Indec report indicates that twelve of the fifteen sectors analyzed managed to moderate their collapse, which reflects, partially the recovery, compared mainly to April because of the greater flexibility implemented in those provinces less affected by Covid-19.
The Argentine economy has been in a prolonged recession for the last two years, down 2,5% in 2018 and down 2,2% in 2019, but before that since 2012 suffered a non growth period, all of which has been worsened by the pandemic.
Experts and consultants surveyed monthly by the Central bank anticipate that the Argentine economy is going to collapse some 12% this year, breaking the record 10,9% of 2002, when the last melting of the economy.
As to prospects, Orlando Ferreres points out that the pandemic is the most urgent of the problems that influence the Argentine economy and if the country survives the sanitary situation, the most frail situation of the macro economy will be an inconvenient for recovery efforts.
In effect, the primary deficit currently financed with Central bank emission, printing bills, given the absence of other financing sources, threatens with the acceleration of the inflation and a greater pressure on the value of the Argentine currency.
To this must be added a virtual freezing of investments and a population with a very low income level, all of which anticipates a slow exit from the current recession.