Can Argentina resist the Covid-19 crisis?

. Mar 17, 2020
Can Argentina resist the Covid-19 crisis? Abandoned area in Buenos Aires. Photo: Klaus Balzano/Shutterstock

Argentina’s recently sworn-in President Alberto Fernández has taken serious action to prevent the novel coronavirus from spreading across his country. After two confirmed deaths related to Covid-19, Argentina decided to close its borders for at least 15 days and suspend classes in public schools. Mr. Fernández’s actions come as a contrast to his Brazilian counterpart Jair Bolsonaro, who has instead broken self-isolation protocol and called the outbreak a media-created “fantasy.”

Sitting next to his opponent and Buenos Aires mayor Horacio Rodríguez Larreta, Mr. Fernández said the measures are the only government’s first steps to “reduce the virus’ expansion capacity.”

But

for Argentina, the <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/03/11/covid-19-tracking-coronavirus-latin-america/">Covid-19 pandemic</a> couldn&#8217;t have come at a worse time. Latin America&#8217;s third-largest economy is still battling its worst financial collapse in at least 20 decades.</p> <h2>Argentina gets extra Covid-19 symptoms</h2> <p>Taking over the reins of a country with yearly inflation of 53.8 percent and <a href="https://brazilian.report/latin-america/2019/10/29/legacy-mauricio-macri-leave-argentina/">5 million people dropping below the poverty line</a>, the prospect of having its economy grind to a halt could bury Mr. Fernández&#8217;s hopes of stewarding an economic recovery.</p> <p>According to consulting firm Ecolatina, Argentina could see its economy shrink by almost 2 percent in 2020 due to the Covid-19 crisis—from initial estimates of a negative growth rate of &#8220;only&#8221; 1.5 percent. In monetary terms, this translates into a USD 450-million hit to the economy.</p> <p>Former Deputy Secretary of Industry and Commerce Miguel Ponce said the country’s economy—especially its labor sector—first needs urgent measures to sustain it. This becomes increasingly important as the pandemic is set to severely slow down China&#8217;s economy.</p> <div id="buzzsprout-player-2981242"></div> <script src="https://www.buzzsprout.com/299876/2981242-99-is-recession-inescapable.js?container_id=buzzsprout-player-2981242&#038;player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <p>“Amid so many ‘ifs,’ the only thing we can say for sure is that the <a href="https://brazilian.report/newsletters/brazil-weekly/2019/11/25/crisis-south-america-problem-brazilian-exporters/">impact will be hellish</a>. We already see impacts on exports by both quantity and price, as many exporting products require inputs that arrive from abroad. A clear sign of the Chinese slowdown,” he told <strong>The Brazilian Report</strong>. This Monday, indicators showed China’s industrial production fell 13.5 percent, the first drop in almost 30 years.&nbsp;</p> <p>Retail sales are also in <a href="https://www1.folha.uol.com.br/mercado/2020/01/sem-esperanca-na-argentina-vendas-internas-sao-aposta-das-montadoras.shtml">hot water</a>: the National Statistics Office (BNS) reported that this index, which reflects the country’s consumption, dropped more than 20 percent this year against the first months of 2019.&nbsp;</p> <p>“In Argentina, we can see how the devaluation pressure works on the currencies of all emerging markets. For example, in this latest crisis, we could export only one-third of that we usually do to China [Argentina&#8217;s main trade partner outside of South America].”</p> <h2>First, do your homework</h2> <p>As we reported in 2019, <a href="https://brazilian.report/latin-america/2019/10/09/argentina-agribusiness-macri-presidency/">agribusiness</a> is one of Argentina’s engines, amid several problems. With the external factors out of his control, President Fernández has to look within his own borders.</p> <p>Tourism is one of the sectors on edge. According to the country&#8217;s tourism department, the industry made up for 10 percent of Argentinian GDP in 2018, accounting for 9.4 percent of all jobs created in the country. While hits to the currency usually make the country more attractive to dollar-based economies, the coronavirus pandemic has completely put a pin in the sector&#8217;s ambitions. </p> <p>For Argentina, Covid-19 is an unthinkable scenario. The economy is stationary and no money is coming in. The borders are closed, and they could remain that way considering the Brazilian president&#8217;s disregard for the pandemic.

 
Lucas Berti

Lucas Berti covers international affairs—specializing Latin American politics and markets. He has been published by Opera Mundi, Revista VIP, and The Intercept Brasil, among others.

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