More than 125 days after the start of the “Social, Preventive and Mandatory Isolation” policies, the evaluation of the results of the official measures for the containment of the coronavirus and its economic and social costs becomes increasingly arduous.
As of July 20, the Oxford Stringency Index (OSI), a measure of how extensive and limiting freedoms government quarantines have been, placed Argentina at the global top, above countries that, like Italy and China applied harsh measures to control their respective viral outbreaks.
The Argentine OSI also exceeded that of neighbors who, like Chile and Peru, register a high number of infections and deaths, and clearly that of Sweden, one of the countries that applied the most lax measures and appealed to individual responsibility, but initially had a very high number of deaths in two vulnerable groups: elderly in nursing homes and immigrants, highly exposed in service sectors and less receptive to official messages, even due to language issues. And it was also far superior to that of high-population countries that, based on erratic policies and leaders with contradictory messages, recorded a large number of infections and deaths, such as the USA, Brazil and India.
As the 32nd country in the world with the largest population (Worldometer), Argentina ranks 18th in the number of coronavirus cases out of 163 for which data is updated daily by the “Coronavirus Resource Center” at Johns Hopkins University. Only two of the countries with the highest number of infections than Argentina (Peru and Chile) have the least population.
In turn, as of Saturday, July 25, Argentina appears in position 50 of the records of deaths from COVID-19 in relation to the number of inhabitants, and rises to 44 if countries with a meager population are excluded from the ranking (San Marino, with 42 dead, plus Andorra, Monaco, Luxembourg, São Tomé & Príncipe and Montenegro).
Far were the assurance of the Health Minister, Ginés González García, that there was “no possibility that the coronavirus would reach Argentina”, the predictions about when the pandemic would peak, criticism of other countries and even continents (” the Europeans made two mistakes: leaving late, and leaving staggered, perhaps out of respect for democracy and the free will of the people, “said the minister on March 20, the first day of quarantine) and the presidential films pointing For example, Sweden, which has a mortality rate from Covid much higher than Argentina, but seems to have stabilized the number of infections, to the point that today it is half of what is registered in Argentina.
To the option “Health” vs “Economy” that the government proposed at the beginning, the immediate and future economic cost overruns (GDP, unemployment, fiscal deficit, fall in productivity and wages) and its social drag in the form of increased poverty must be charged , insecurity and, again, healthcare costs, including more deaths.
A first indicator to take into account is Indec’s Monthly Economic Activity Estimator (EMAE), the closest figure to GDP calculation, which fell 26.4% in April and 20.4% year-on-year in May. Even more abysmal are the calculations of the consultancy Invecq on the fall in the first five months of the year, much more acute than any of the previous episodes of crisis.
Incidentally, 2018 and 2019 had already been recessive years. “The GDP per capita of the Latin American region fell in most countries, both due to endogenous economic problems and social and political tensions. One of the countries that fell the most, excluding Venezuela, was Argentina, which in 2019 had a 3.1% drop in GDP per capita, ”said Natalia Motyl, of the Fundación Libertad y Progreso, based on data at“ constant values ”Of the World Bank. “In 1960 we were in position 21 in the world ranking of GDP per capita, in 1970 we fell to 32, in the 80 we fell to 43, in 1990 to 52, in 2000 we were already 60 and in 2010 in the 62 ″, Motyl reported to Infobae, in a decline that seems not to end.
A compilation of data from a more varied group of countries, from the risk rating agency Standard & Poor’s for the decade 2010-2019, places Argentina as the country with the highest loss of GDP per capita (with China at the opposite extreme). And if the 2020 GDP projection is taken into account, the drop in GDP per capita will touch 20%, according to consultant Miguel Ángel Broda calculated.
Already last June, the UCA Social Debt Observatory had estimated that due to the pandemic and quarantine, some 900,000 people had lost their jobs, mainly in the informal sector, which in turn, as well as the recession and the drop in productivity, above the level of wages and income.
Motyl analyzed the evolution of the minimum wage in dollars in different Latin American countries. “Since 2010 Argentina’s salary fell more than 40%, surpassed by Venezuela, which fell 99%. In 2010 the minimum wage measured in dollars was USD 393, today it is USD 235, 40% less. Furthermore, compared to December 2019, the salary in dollars fell 12.0%; Argentina fell two places in the salary ranking, going from sixth place to eighth place so far this year, ”the economist, who prepared the attached table, told Infobae.
Until now, the government has tried to contain the economic collapse with programs such as the Emergency Family Income (IFE) and other subsidies for the poorest sectors, and with ATP (partial payment of formal wages and credits to monotributistas and self-employed) to the private enterprises, measures that, with differences in volume and design, were used by most countries.
The problem is that these measures, mounted on an already high level of public spending, deepen the fiscal deficit and are financed with monetary issuance, which in Argentina carries a history of defaults and inflation, due to lack of macroeconomic and currency behavior. reliable, economists agree
The graph above, prepared by the international business specialist and director of DNI Marcelo Elizondo with the IMF database, shows that in a sample of 18 countries in Latin America, Argentina is the second with the highest public spending in relation to to GDP, second only to Venezuela.
With the drop in revenue and the increase in spending, the fiscal deficit could not but explode. In fact, in June it was $ 253,000 million, 37 times higher than the same month of 2019, and estimates by the consulting firm Eco Go project it at 7.5% of GDP.
Inflation was relatively anesthetized by the pandemic, but it remains high against any record of normality and carries a record that also highlights Argentina with respect to the countries of the region. In his last monthly report, Broda specified, for example, that in the decade 2010-2019 Argentina accumulated inflation of 1,571% and was the only country in a group of five Latin American economies whose annual average was two digits, well above of the others. In Latin America, only Venezuela has overcome the Argentine figures in recent years, against the progressive disappearance of the currency as a unit of account, medium of exchange and value reserve.
With the GDP, employment and income and wages in decline, without fiscal and monetary margins and with a public debt that is not finished renegotiating, even the leaders of the CGT agreed, in a virtual meeting with the businessmen nucleated in the Association Argentine businesswoman (AEA) that the recovery of the economy will depend on the private sector.
But, again, Argentina also shows a discouraging comparative table here. The latest edition of “Doing Business”, an exhaustive report by the World Bank on the ease (or difficulty) of the private sector to undertake activities, shows that out of a total of 190 countries evaluated, Argentina appears, with a score of 59 points out of 100 , in position 126. That is, in 125 countries of the world it is easier to do business than in Argentina.
Based on different measures, the World Bank builds 12 indicators (procedures to start a business, construction permits, electric access, property records, access to credit, protection of minority investors, taxes, foreign trade, contract compliance, resolution insolvencies, job hiring facility and government hiring) and concludes, for example, that it is easier to undertake a private activity in Lesotho, Senegal, Brazil and Paraguay (which occupy positions 122 to 125), which in Argentina. At the top of the list, as the most friendly countries for private initiative, are New Zealand, Singapore, Hong Kong, Denmark and South Korea. And below all Libya, Yemen, Venezuela, Eritrea and Somalia. The best ranked Latin American countries are Chile (59) and Mexico (60).
The worst rating in Argentina is the relationship between the “total taxes and contributions” that according to the law companies should make to the treasury, in relation to their effective profits, an indicator in which it appears as the second worst, only surpassed by the Comoros Islands. In fact, according to the report, they are the only two countries where if companies paid all taxes, they would lose money. For Comoros, the index is 220%, for Argentina, 106% (of formal taxes in relation to profits), well ahead of the countries that follow: Eritrea and Bolivia (84%) and Equatorial Guinea (79%) . The weight of the taxes on the profit of companies, if everyone paid what the law establishes. Argentina, regional “advantage” The weight of taxes on corporate profits, if everyone paid what the law establishes. Argentina, regional “advantage”
All in all, the most relevant comparisons are with Latin American neighbors, in which the tax backpack on eventual business profits is substantially lower than in Argentina.
These are precisely the countries with which Argentina will have to compete in the coming years for investment, local or foreign, in search of the post-pandemic economy.
