Argentina, the seventh worst recession in the world

Argentina is experiencing the seventh worst recession in the world this year and the recovery is slower than expected, according to the report released by consulting firm Ecolatina.

"The 2.7% decline in our GDP per capita makes us the seventh country to record the worst economic performance in the world according to IMF projections, overtaken only by Venezuela, Guinea, Iran, Nicaragua , Sudan and Turkey ", badured Ecolatina.

In January and February, activity posted seasonally adjusted growth, while the exchange rate remained close to the floor of the no-intervention zone.

But the March exchange move (11% between points) accelerated inflation, "reduced real wages and raised the key rate by drying up green shoots in the first two months," said Ecolatina.

At the same time, Brazil, which is expected to grow at around 2% over the year, experienced a slight contraction in the first quarter, further complicating the local recovery.

Thus, for March, the level of activity was lower than in December.

According to Ecolatina, the March figure "surprised us negatively to the point of requiring us to adjust our growth projection for the year".

"The 0.3 percentage point adjustment involved moving from a contraction of 1.4% annual average to 1.7%," he said.

He said that "the data is even more discouraging if it is calculated per capita, in which case the fall would be 2.7%, leaving us practically at the same standard of living as 10 years ago".

The membership of Argentina in this group of economies in recession "is not only temporary, but inscribed in a historical behavior," warned the consultant.

In this context, he noted that "at the beginning of the year, we warned that the recovery would not be fast, even if the recession engine of 2018 was similar to that of 2016 (up significant exchange rate), the improvement in activity would not allow an appreciation of the exchange rate – the pillar that he found in 2017 ".

"As Argentineans, we are used to living in an extremely volatile economy.This volatility is not only high, but is also a feature of our economy in recent decades," he said.

The report states that "since 1950, 35% of the years have been recessive, but this average does not take into account specific cases".

"A 30-year-old Argentinian has spent 40% of his life in recession and another 20 years has spent nearly half of his life in this state". These figures can only be compared with those of Congo, Iraq, Syria or Zambia, countries that can hardly be called market economies. In this sense, it is not unreasonable to say that Argentina is the most unstable economy in the world, "he added.

The consulting firm said that "to face the next presidential cycle, economic performance will depend on the elected government's ability to dispel doubts about the repayment of the public debt".

The current payment mechanism with the IMF stipulates that Argentina should pay US $ 52 billion between 2021 and 2023 and it is not certain that the country will not be able to resort to the market to incur a debt of this magnitude. .

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