MercoPress. South Atlantic News Agency

Quarantine has catastrophic consequences on Argentina's economy, report shows

Last year, 22,860 companies were lost to restrictions, more than those which had closed in 2018 and 2019 combined

Argentina's Federal Tax Bureau AFIP data shows 235,381 jobs were lost and around 23,000 companies had closed as the result of the contraction in the economy due to the health measures to control coronavirus, it was reported Friday.

Last year, 22,860 companies were lost to restrictions, more than those which had closed in 2018 and 2019 combined, according to official records, thus resulting in the loss of 235,381 jobs, the news outlet TN reported, although it admitted there might be some margin of error since these figures stem from tax returns, some of which may have not been filled out properly if at all.

“For a company to decide to close, there must be very big problems and even a lack of perspective”, consultant María Castiglioni of C&T Asesores Económica was quoted by TN as saying. “But stronger is the drop in employment, which happened despite the ban on layoffs,” she added.

There were the results despite the government's “ban” on layoffs, which basically consisted of doubling the severance money an employee was entitled to, and the ATP program under which the state took care of the salaries of workers whose employers - 300,000 companies - were forced to close temporarily to observe the mandated quarantine.

“In 2020 more firms were destroyed than in the accumulated of 2018 and 2019. Something similar happens with the employees, which worsens the situation even more,” Ecolatina Chief Economist Matías Rajnerman told TN.

The number of companies in Argentina has been in decline for several years. In 2015 there were 568,737 of them registered before the AFIP, of which 521,372 were still standing by the end of 2020.

“Even though the GDP may have grown in some years, the almost constant reduction in the number of brand companies to invest in Argentina is more an exception than a rule. A country without investment is a country that mortgages its future growth”, explains Rajnerman. “Consequently, today's problems will likely be aggravated in the future,” he added.

And Economist Juan Ignacio Paolicchi, from the Empiria consulting firm, insisted that ”The pandemic factor is temporary, but there is something permanent: (...) a lack of macroeconomic stability.“