Due to the measures adopted and lack of foresight, Argentina could go back 10-15 years in 2020
This year we will undoubtedly suffer a severe blow to economic activity. Taking the projections of the Fundación Libertad y Progreso for 2020, the level of activity could fall 8.3% in an optimistic scenario and 15.0% in a pessimistic scenario. In the first scenario, the level of activity would fall back to the levels observed in 2009, while, in the pessimistic scenario, the fall would take us to the 2006 levels.
Since Argentina entered Social, Preventive and Mandatory Isolation on March 20, the activity has been practically paralyzed. This led to the intention, for several days, of promoting a debate between “healthiness or economy”. They are actually linked and not exclusive variables.
The recovery in the level of activity will largely depend on whether the private sector survives and companies do not go bankrupt, but it will also be essential to start tackling pending structural reforms so that the country does not stagnate at a level of activity lower than that observed prior to Covid-19. Eventually, there will be some recovery, especially if the default is avoided, but this will be less the observed drop.