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Photo: Ueslei Marcelino/Reuters
Photo: Ueslei Marcelino/Reuters

How Quarantine and COVID-19 have Argentina headed for a historic low

Argentina recently delayed the restructuring of their $65 billion bonded debt and it could expect a 10% drop in GDP because of restriction measures.

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When Alberto Fernández assumed the presidency of Argentina six months ago, he knew he was inheriting a bleak economic situation, but could have never predicted how COVID-19 would add to the country’s downturn. 

The Argentine government has now been forced to delay the restructuring of its debt to July 24 after the lack of an accordance on their bonded debt of $65 billion. 

As of late 2019, the country’s total debt stock stands at $323.3 billion. Two of the largest sectors of the debt are owed to the International Monetary Fund and foreign law bonds issued under Argentina’s previous president, Mauricio Macri. 

Argentina and its international creditors refused to cede to one another, which came after the country’s ninth sovereign debt default on May 22. 

The country of over 45 million people has seen a nationwide lockdown since mid-March and it is expected to continue until July 17

In the month of April alone, the country saw a 26.4% drop in their economy according to a report by Argentina’s National Institute of Statistics and Censuses. 

In the same report, it showed that the industries hit the most were construction and hotels & restaurants. They saw a 86.4 and 85.6% fall respectively.  

Argentina’s agricultural sector has also been impacted even though they have not scaled down operations like other industries. 

Farmers are seeing an infestation of 40 million locusts that came in from Paraguay that tare mainly threatening their corn and soybean products. 

In 2018, according to the Observatory on Economic Complexity Argentina was the world’s second largest exporter of soybeans, only behind China. The insects have primarily remained in Argentina’s Corrientes province, but it shares a border with Brazil, Paraguay and Uruguay. 

The lack of economic mobility and strict lockdown measures have not been able to contain their COVID-19 numbers. 

The South American country has seen more than 1,000 new cases per day since June 9 and they currently have over 62,000 confirmed cases and 1,280 deaths. 

The spike in cases is expected to continue as President Fernandez has been forced to lax restrictions in some of the more rural parts of the country. Buenos Aires and its surrounding areas will remain under lockdown until at least July 17. 

The lives even for those who are not infected is still dire as Argentina tackles the continuation of a recession and simultaneously feeding its people in need.

A report by the United Nations titled: “COVID-19 in Argentina: Socioeconomic and Environmental Impact,” details the scenes on the ground. 

Argentina will now need to provide food assistance to 11 million people. Figures for children in poverty are estimated to jump from 53% in 2019 to 58.6% by the end of this year. Up to 850,000 could be lost in 2020. 

The same report also estimates that the country’s GDP will fall 10% by the end of the year and that would be significant because it would mean Argentina will face three consecutive years of a decreasing GDP. 

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