recession will be the biggest in history

The consultants assure that Argentina is heading for the worst recession of its history, with a drop in gross product that will be aggravated by the crisis and will reach 20%.

Since the first quarter of 2018, when the strong devaluation of the peso, the activity collapsed and the negative trend will continue until values superiors to those of the 1999-2002 crisis: to Eco go will be from 23.3%, as long as Analytica projects a 20.6%.

The quarantine finished forming a fatal cocktail. According to a study by CEDLAS-University de la Plata cited by Clarín, a room of the Argentines in active age his income was affected. The 75% Argentina’s GDP depends on the wages and consumption.

In the first three months of the year, GDP fell:

– 4.8% in Argentina

– 1.8% in United States

– 3.3% in Europe, with peaks of 5% in Spain

However, in the developed world the exercise I know recover having overcome the peaks of the disease, while reopened the factories and items “non-essential” based on monitoring of those infected by the pandemic. That would also be the key for Argentina.

“If a business goes from serving one person to none, or if a restaurant opens five tables in relation to none, the increase is infinite,” exemplifies Santiago Gambaro, analyst economist.

And he adds: “We see a Recovery gradual by stages. From the bottom of the second trimester of the year there will be a quick reactivation with the first flexibilities and then a slow convergence towards pre-Covid levels. “

The Economy Minister Martín Guzmán plans a GDP below the 5% by 2020. However, for Eco go will be located in 8.7% and to Analytica in 8.5%.

Although they are less than almost 11% in 2002, if measured from the beginning of the collapse in 2018, then the recession will be more serious and would exceed twice the crisis that ended with the Alliance government.

“To think about a rebound will be key close the debt and a plan to correct the fiscal deficit and remove the surplus weights. The supply shock is very strong and ends in a demand shock because we start from a economy I did not have savings, no market to place debt, not a currency of reservation of value to give to the little machine, “says Federico Furiase, economist at the Eco Go consulting firm.

Never seen

The economist Miguel Ángel Broda analyzed the economic panorama that Argentina is currently going through and stated: “We never saw one recession of this magnitude. “

He said this when analyzing the data of the last Monthly Estimator of Economic Activity (EMAE) of INDEC, which were released on the same Wednesday and showed a year-on-year decline of 11.5% in March. This is the worst month of March for activity since 2002.

For the expert, the situation that Argentina is going through is “much harder that hyperinflation from 89-90 “Therefore, it considered essential that the Government define an economic program for the way out of social isolation, preventive and compulsory and for the impact it will have on the economy.

“The government has no room for maneuver. We are at a very difficult crossroads and for now with the ship adrift,” he said on LN +.

According to Broda, this crisis may be an opportunity for the country to organize its macroeconomic accounts and achieve stability and growth.

“This is a circumstance where public politics they have to be very expansive. We we don’t have whatBecause we do not have access to markets, we have exceptional macroeconomic disorder. It is very difficult to find a country as fragile, weak and macroeconomically vulnerable as Argentina, except Iran and probably Turkey, “he explained.

Hyperinflation risk

Miguel Angel Broda referred to the management of the economy that Martín Guzmán is carrying out

When asked by LN + about whether the country is at risk of falling into a hyperinflation similar to that occurred in the 1980s, The economist replied that it depends on the course of action taken by Alberto Fernández regarding his economic team and especially with the Minister of Economy, Martín Guzmán.

Broda considered the two possible scenarios: “Yes Martín Guzmán continues as minister and it complies with the fact that it is going to sterilize monetary expansions, which are necessary because they are the only source of financing for spending, we avoid it. Now, if we believe that inflation has nothing to do with it and that it does not depend on the issue, we are not going to be able to avoid it. ”

The expert strongly questioned the actions of the Economy Minister, who has been carrying out the renegotiation of the debt with external bondholders, along with what happens with the pandemic in the world and in Argentina.

“I cannot say that Guzmán is a guarantor, a heterodox economist, a leader and clearly from the same ideological root that led us to this decline, but ahead of the alternatives I hope that it complies and that sterilize enough of the monetary expansion we’re having, “said Broda.

Default danger

Miguel Angel Broda estimates that the fiscal deficit cannot be sustained in the second semester

At the beginning of the month the economist had also considered a relief the extension of the debt negotiations so as not to fall into default, and that the Argentine proposal to the bondholders had been “hard” but not far from the position that creditors had taken.

“We must restructure as soon as possible to pay as little as possible, the first part has been done by the second part. Now we have to cross our fingers and avoid default because the recovery of the economy is going to be very different “with or without cessation of payments,” he added in that instance.

Now, in this last interview, the economist also worried about the fiscal deficitthat balance could not be maintained in the second semester.

And he added: “If we want to keep it in real terms, we are going to have major problems. The social conflict that is generated and an increase in the inflation rate that is inexorable will generate enormous social dissatisfaction.”

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