Economy

Graphic: Industry reports show record-breaking recession

21st May 2020

By The Essential Staff

Graphic: Industry reports show record-breaking recession

Argentine state officials have been working with (and leaking) estimates of a strong but not unprecedented economic recession this year, sometimes even reaching two digits of GDP drop for the year like in the country’s 2001-2002 crisis, when a 10.9 percent contraction was registered. But reports of industrial and construction sectors show a much more alarming deterioration this year so far. And with COVID-19 cases only starting to rise in Argentina, a quick turnaround to end the year in a much stronger note could prove hard to achieve.

</p> <img class="wp-image-10042 aligncenter" src="https://gettheessential.com/wp-content/uploads/2020/05/indexes.jpg" alt="Argentina's industry and construction index show a larger recession than expected might be coming this year" width="829" height="465" srcset="https://gettheessential.com/wp-content/uploads/2020/05/indexes.jpg 2500w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-300x168.jpg 300w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-1024x574.jpg 1024w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-768x430.jpg 768w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-1536x861.jpg 1536w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-2048x1148.jpg 2048w, https://gettheessential.com/wp-content/uploads/2020/05/indexes-600x336.jpg 600w" sizes="(max-width: 829px) 100vw, 829px" /> <p>According to public and private data compiled by the <a href="https://www.invecq.com/contenidos/economia/los-primeros-datos-la-crisis/">Invecq consultancy agency</a>, sector-by-sector figures available for March and April are unprecedentedly alarming. The car industry might be the most impressive case, with a total of 0 new cars manufactured in April, a 100 percent drop in an industry that was already in <a href="https://gettheessential.com/economy/2019/08/08/car-industry-automaking-vehicle-manufacturing-automotive-argentina-mercosur-sales-production">dire straits prior to this crisis</a>. Similar, although not quite catastrophic figures can be seen in other manufacturing businesses.</p> <p>As for construction, another key sector for blue-collar jobs just as manufacturing, the drop was even more dramatic. March saw a 32.3 percent drop when compared to February and 47 percent in the year-on-year comparison. &#8220;But construction activity only stopped on March 20,&#8221; Invecq&#8217;s report argued. &#8220;This means that April and May will show much worse declines.&#8221; In fact, analyzing sales of construction inputs in the Construya index, which is often a good private proxy for INDEC&#8217;s public statistics in the construction sector, which come out later, the drop in April was of a staggering 75 percent, as the chart shows.</p> <p>Overall economic activity is also looking grim, with the INDEC statistics bureau reporting <a href="https://www.indec.gob.ar/uploads/informesdeprensa/emae_05_207F634B218B.pdf">yesterday</a> a 11.5 percent contraction for March when compared with the same month in 2019. That figure could easily double in April considering the much larger extent of the lockdown that month.</p> <p>

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The Essential Staff

The Essential is a premium subscription-based news platform that brings you high quality journalism and in-depth coverage in English about the changing face of Argentina’s politics and economy.