The day after the pandemic: what will happen to Argentine exports

The European Union, the United States, Canada, Russia, China, India and Brazil own 72 percent of the world GDP and account for 90 percent of cases of Covid-19 transmission.

That was the data with which the economist Ramiro Farías began his conference on line “Impact of the coronavirus in the world, consequences in the Argentine economy and foreign trade”, organized by the ProCórdoba Agency together with the National University of Villa María (UNVM).

“Three quarters of the world economy are the most affected by the pandemic. They are the countries that move the wheel at a global level ”, Farías remarked as a starting point to understand the damage that this health crisis can leave.

Hours later, members of the Córdoba Foreign Chamber of Commerce (Cacec) listened to the analysis of the expert in politics and international relations, Patricio Carmody, on the “post-Covid-19 global and commercial challenges”.

Carmody provided other eloquent numbers on the wounds the new coronavirus will leave on the health of the world economy.

“Last year, according to the World Trade Organization (WTO), global trade had decreased one percent. Now, the positive forecast is down 13 percent and the most pessimistic, down 32 percent. Only in the second semester of 2021 could normal levels be recovered, ”he said.

From his dissertations, a sort of Foda analysis (Strengths, Opportunities, Weaknesses and Threats) for Argentine exports emerged. Some of the conclusions are summarized below.

Digital world

For Farías, the world is facing a mix of crisis scenarios: a mix between the economic damage left by the 2008 international financial crisis and the health problems that remained after the First World War.

“This means a horizon of duration of the problems of one to three years, which would be solved faster with coordinated global reactivation actions such as those that occurred in 2009, but that are not being seen today,” he said.

However, in every crisis opportunities arise and one that is clearly seen is that of the expansion of the digital world.

The economist produced a graph that shows how Amazon’s shares are above the value they had before the pandemic, while those of Google and Netflix have already recovered the drop since the Covid-19 impact began.

“In Córdoba there is a very important pole of software development that, given this situation, can receive very important opportunities”, Farías valued.

Carmody agreed. According to his view, the coronavirus is “digitizing everything by default” and that means that there are going to be many processes that are going to be made virtual and will allow decisions that used to take a long time, now to be made with greater speed. For example, changing providers if one fails.

“Argentina is well prepared for all this; It has great capacity in everything that is programming, design, online marketing“He emphasized.

World supermarket

For Carmody, the other great advantage that the country has is its food production capacity.

This is a real strength since it is the main source of dollars that the country has for exports and, although food has also suffered the impact of the Covid-19, the reality is that it is a less elastic demand because the world inevitably you need to keep consuming protein to survive.

According to Farías, on the map of the Argentine export complexes, 50 percent correspond to the agri-food industry.

The good news is that the world cannot stop consuming food. And although prices fall, they fall less than in other areas ”, he summarized.

In relation to last December, for example, the general index of food prices of the United Nations Food and Agriculture Organization (FAO) fell 10 percent, but in some keys for the country such as meat and cereals, the drop was less.

Similarly, soybeans currently have the same price as a year ago as beans and are worth two percent more as flour, which is the main product exported by Argentina. Wheat that is beginning to be planted in the country is another crop with a positive horizon due to the high global demand for flours for human consumption.

Against this background, the two analysts agreed that protocols in health will have to be adjusted, because it is likely that in the future world barriers of this type will intensify.

Global map

Finally, Carmody also made reference to the changes at the geopolitical level, dominated by the growing confrontation between China and the United States.

His opinion is that balance should prevail; that is, not to gamble in favor of either of the two nations in dispute. Also, do not generate conflicts with Brazil or Chile, which are very important markets for national exports.

“Since everything is slowed down, this is not the time to fight with anyone,” he summarized.

On this point, Farías expanded that, among the six main buyers of Argentine goods, Brazil, the United States and Chile have a prospect of a decline in their economy; while China, Vietnam and India would have better results.