Feature: COVID-19 batters Argentina's already weak economy

Source: Xinhua| 2020-04-06 12:59:45|Editor: huaxia

BUENOS AIRES, April 5 (Xinhua) -- Martina Moreno, a programmer at a computer firm in Buenos Aires, is now trying to spend as little as possible, just on food and basic hygiene products, as economists warn the COVID-19 pandemic is battering Argentina's already weak economy.

The computer programmer is among the country's general public who fear mass layoffs and are prioritizing savings over spending as those areas of the economy that are still functioning see less activity.

"I am trying to shop at small stores to help the small business owners amid this really tough situation. But what is certain is that there is a lot of uncertainty among all of us who have to work every day to purchase the basics for our homes," Moreno told Xinhua.

"I am working remotely, but we see that in certain sectors they are letting people go, and we don't know whether that will happen to us due to the readjustment we see happening," Moreno added.

Last week, Argentina reported 1,133 cases of COVID-19 with 34 deaths, according to Argentina's Health Ministry.

Social distancing and other containment measures imposed by the government through April 12 have partly brought economic activity to a standstill, especially tourism and entertainment, which are considered non-essential yet contribute significantly to the gross domestic product (GDP) and jobs creation in the country, noted experts.

Consulting firm Ecolatina has warned of the ripple effects of a drop in demand for such things as gasoline, since people are staying home and fewer cars are running on the streets.

The country's economy is witnessing a vicious cycle of lower demand, fewer jobs, greater fear and again lower demand, said Ecolatina.

Amid the pandemic, Argentina's government has focused its attention on protecting the country's most vulnerable sectors, such as low-income households and small and medium-size businesses.

But financial analysts consider those measures to be "expansive," because they imply injecting liquidity into an economy where inflation was running at 53.8 percent in 2019.

Job security is evident in sectors considered essential and that must continue despite the pandemic, as well as those that can be carried out remotely from home.

Writing in local daily El Cronista, Fausto Spotorno, director of the Economic Studies Center at OJF Consulting, said Argentina's economic losses due to the containment measures in March could amount to 1.2 percent of annual GDP, or "the equivalent of a little more than half of last year's recession."

According to the economist, "there are businesses or companies that will not reopen and there will be jobs that will be definitively lost. It is also unlikely that everything will return to normal on April 15, instead there will be a gradual coming out (of quarantine) that will also have its impact on the economy."

Ecolatina said families that are self-employed or working in the underground economy "will see a limit on their potential consumption."

To compensate, Argentina's government has called for an "emergency household income" equal to 158.3 U.S. dollars for each of some 3.6 million households.

That aid may not reach everybody who needs it, said Matias Fernandez, who has an informal job in the city of La Plata, and is currently "living off his savings" and "waiting for the quarantine to be lifted."

Economists estimated the epidemic could shave another 0.5 percent off Argentina's already shrinking GDP, for a total of a 2-percent negative growth, depending on how long the disease lasts.

"What we are certain of is that without health, there is no economy," economist Daniela Wechselblatt told the daily Infobae.

"But if we have health and patience, those investment opportunities that bold investors so look forward to will appear amid the storm, and we have to be ready to make the most of them," said Wechselblatt.