Greater trade openness is key to Argentina’s recovery

Photo Natalia Motyl
Natalia Motyl

Bachelor of Economics (UBA). Economic Analyst of Libertad y Progreso.

(Xinhua) Greater trade openness will allow Argentina to launch its economy in an adverse context due to the COVID-19 pandemic, analyst Natalia Motyl said today.

The economist of the Fundación Libertad y Progreso (FLyP) said in an interview with Xinhua that “Argentina should take advantage of the rise in the price of commodities that will be produced in the coming months, as a result of higher world demand.”

“Greater trade openness is necessary. The government cannot afford to trade only with the countries and regions that the Southern Common Market (Mercosur) wants. Argentina should begin to negotiate bilaterally with its main trading partners,” the academic stressed. .

Motyl predicted a boom in world demand for Argentine products, mainly from the food sector, and urged that they be prepared to take full advantage of this situation.
“If we now close ourselves to the world, we lose,” warned the expert.

The first quarter of the year closed for Argentina with a trade surplus of $ 3,297 million, as a result of exports that totaled $ 13.2 billion (a year-on-year drop of 6.8 percent) and imports that fell by 18.6 percent year-on-year, reaching 9,903 million dollars, according to official data.

The Economic Commission for Latin America and the Caribbean (ECLAC) said last month that the Argentine economy will retreat 6.5 percent in 2020 due to the pandemic and the high level of indebtedness

“This year the activity in Argentina will fall at least 10 percent. Since March, due to the pandemic, we have the most vulnerable economy in the region in ‘hibernation’. Sectors such as tourism, construction, automotive or steel have liquidity problems and creditworthiness, “Motyl warned.

In addition, there are problems in global supply chains, so there is no possibility that the aforementioned sectors will rebound this year, even if credit lines are provided, the expert considered.

In 2021, “in the best scenario, without falling into default (default), a slight recovery in the economy is possible only after the second half,” Motyl said.

This will be driven by the agro-export sector, the only winner in relative terms, and especially by an improvement in external conditions, added the analyst.

Deepening the internal situation derived from the quarantine by COVID-19, the FLyP analyst said that “a tax cut is urgent to grant liquidity to sectors that are paralyzed by measures to mitigate the spread of the disease.”

“This must be accompanied by a drop in regulations and a reduction in public spending, with cut wages for public employees. It is also necessary a show of ‘solidarity’ by officials, depriving themselves of a year of wages and privileges, “emphasized the interviewee.

Argentina, quarantined from March 20 to May 10 by COVID-19, confirmed 5,208 cases as of Wednesday night, of which 1,524 recovered and 273 died.