In year of pandemic, Argentina fell to 30th place among global economies

The contraction of activity in Argentina last year, one of the countries most affected by the advance of the Covid-19, which occurred in parallel with the continuation of a deep devaluation of the national currency, s ‘is replicated in a decline in the ranking of the most important economies of the world.

Based on data from World Bank and International Monetary Fund (IMF)published in their World Economic Outlook, Argentina’s GDP fell at the end of 2020 to the annual equivalent of $ 383,000 million, which places the country in the ext 30 among the world’s largest economies.

In terms of GDP per capita, it has fallen to lower levels than in Austria, United Arab Emirates, Ireland and Israel

Argentina lost four places last year internationally compared to much smaller countries in terms of population and area, overtaken by Austria (USD 428,965 million), United Arab Emirates (USD 421,142 million), Ireland (USD 418,621 million) e Israel ($ 401,953 million).

According to this measurement, the Argentine GDP in dollars went down in his lowest level since 2009, more than a decade ago, it reached $ 332,976 million. That year, INDEC reported a 6% drop in its annual GDP, due to the impact of a major drought and the international financial crisis.

In recent times, the Argentina’s best economic performance was recorded in 1998, when the country occupied the extension 13 in the world, with a GDP measured by the World Bank at 299,000 million dollars.

In methodological terms, the World Bank defines the GDP in “current dollars” as the sum of the gross value added of all resident producers in the economy plus all taxes on products, minus all subsidies not included in the value of goods and services.

It is calculated without deduction for depreciation of manufactured goods or for depletion and degradation of natural resources and the dollar figures of GDP were obtained by converting the value into local currency using official exchange rates for a single year. However, For some countries where the official exchange rate does not reflect the actual rate applied to foreign currency transactions, an alternative conversion factor is used.

Three years off

the Argentina’s last GDP growth year was 2017, while it grew by 2.9%, with a high external debt and a dollar that was far behind Regarding inflation, the currency has become more expensive by 17%, against an average increase in retail prices of 24.8%.

According to World Bank statistics, Argentina’s GDP exceeded the equivalent of $ 643.6 billion in 2017

As a result of these factors, Argentina’s GDP in that year was calculated to be around $ 643,629 million, which positioned the Argentina, 21st economy largest in the world, according to the World Bank database.

Corn a deep recessive process started in 2018 with which the equation was inverted: while the inflation has accelerated at levels above 45% per year, the value of the wholesale dollar soared 102 percent. And after an agreement Be ready with the International Monetary Fund, the cycle of growing external debt has been halted.

These two factors – as well as the real drop in activity – reduce GDP measured in dollars, which, according to IMF estimates, fell to $ 517,627 million, down 20% or $ 126,000 million from the previous year. This way of estimating GDP in nominal terms differs from calculations made by INDEC, which determined that there was an economic contraction of 2.5% in 2018, and where the change in domestic prices and the rate of change is taken into account at the local level and which “smooths” the calculation strictly measured in US dollars.

This 2018, Argentina lost five places, 26th globally, exceeded in productivity by Taiwan, Sweden, Poland, Belgium and Thailand.

After a fall in GDP which according to Indec was 2.2% in 2019 and then accentuated to 9.9% in 2020 by the severe recessive impact of the pandemic, the World Bank has calculated income for Argentina of 445,445 million USD and 383,067 million USD, respectively.

End of the crisis or rebound?

The latest BCRA Market Expectations Survey (REM) showed that analysts consulted expect economic growth of just over 6% by 2021, in what would be the first year of GDP growth since 2017, although the improvement will not offset the sharp drop from the previous year.

In 2020, Argentina’s GDP in dollars fell to its lowest level since 2009, and even more in per capita terms

An analysis of Ecolatin revealed that “the current crisis has a pattern opposite to that of 2018-2019. While at the time, the goods, led by the industry, led the fall, today these sectors with potential for recovery. On the contrary, services, less affected by the 2018-2019 setback, show the worst performance in 2020-2021 “.

Signs of renewal

“Looking to the future, it emerges that in May-June 2021 would have been the lowest level of activity in 2021. During those months, the woes of the first part of the year – high inflation – combined with the worst levels of coronavirus infections and, in response, the greatest restrictions. It can therefore be said that, in the Most likely scenario, the worst would have already passed”.

Nery Persichini, head of strategy at GMA Capital, explained that “in the average activity, we are 8% below the last decade and we talk about another lost decade, added to the decade of the 80s. The recovery through, when we look at the sectors, the activity is only 4% lower than pre-pandemic level, but construction is below 6%, while this is a sector that spills over into the recovery of others. Industry is 1.2% above and commerce 1.2% below ”.

Persichini underlined that “with regard to social indicators, the poverty now affects 43% and it would be close to 44% of the population in the projections for the second quarter, taking into account the evolution of prices. In addition, there are fewer workers looking for work, due to discouragement, but also because of social benefits. There are a greater number of freelancers, the impact of the monotax is undeniable. To stay on unemployment above 10%, It would be election with the highest unemployment rate since 2005”.

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