INDEC estimated April's drop at 26.4% compared to a year earlier and 17.5% from the March level. After 29 months in continuous recession, economic activity is suffering exceptionally badly from the effect of preventive and obligatory social isolation to avoid the contagion of Covid-19. The industry showed a fall of 34.4%; trade contracted 27%; construction plummeted 86.4%, according to the estimate of the official statistics agency.
As of June 23, the BCRA had issued 200 billion pesos ($2.84 bn) to finance the Treasury through the transfer of accounting profits. For the time being, the financing of expenses by issuance would be equivalent to 64% of the estimated tax revenues in June. In the absence of an economic plan, the government is only attempting a forward flight with more quarantine, monetary issuance and BCRA debt, generating a substantial increase in quasi-fiscal spending. The economy is becoming more complicated, as we can see from the drop in the level of activity, the rise in unemployment, poverty and repressed inflation.
For every day of unemployment, the economy loses $715 million in terms of activity. For the entire confinement, the estimated cost would exceed $70 billion. The measure includes the income not generated by the cessation of operations, and the levels at which the deficit and monetary emission rise.
The violence against rural private property has increased in recent weeks with broken grain-bags. Since last December and to date, 57 broken grain-bags, which can store up to 200 tons of soy, corn and wheat, among other grains, there is a total of 11,400 tons affected, of which 1,710 tons would be lost.The criminals throw chemicals on the grain, causing total damage to it, there the loss would reach 60 thousand dollars per bag, so the potential losses would have reached 3.5 million dollars.
The work carried out by the Argentine Institute of Fiscal Analysis (Iaraf) explains that a formal salaried worker in Argentina should work between 181 and 214 days in 2020 to comply with the tax obligations of the three levels of government, depending on their income. By August 1, the national, provincial and municipal levels will have taken up 58.7% in the higher income bracket.
The distribution of income registered a slight improvement in the first quarter of the year, 1.1 % compared to the end of 2019. Distribution deteriorated by 0.6 points year-on-year, according to official statistics, and the weakest sector of the population had incomes 23 times lower than the richest. The Gini coefficient, which measures the degree of inequality through income, stood at 0.444 in the first quarter of the year. The total revenue of the population grew by 49.6% compared to the same quarter in 2019.
Some 100,000 businesses will not survive the pandemic, and the drop in hotel and restaurant activity (83% in April, 83% in May and about 79% in June) makes one fear a massive closing in Buenos Aires. The Argentine Social Debt Observatory estimated that this year up to 900,000 people in the informal sector would lose their jobs, and child poverty will rise from 53% to 58.6%. UNICEF said that since the beginning of the quarantine, 59% of households (approximately 15 million people) have seen their income fall. More than half of private wage earners received up to 75% of their pre-pandemic wages.
About 2.4 million people bought dollars in May for savings, twice as many as in April. Net foreign exchange purchases were $534 million, and average per capita purchases were $190. International reserves decreased by $980 million in May, according to the Central Bank's Foreign Exchange Market and Balance Sheet Report.
While the 2019/2020 corn harvest is progressing, where it has reached 78.3% so far, the Rosario Stock Exchange (BCR), less than three months before the beginning of the planting, projected a drop in the area in the order of 10%. The reasons are the increase in costs, inputs and freight, but also climate and economic uncertainty.
The Government extends the Maximum Price program for 30 days, until the end of July. These are about 2,300 products that will not suffer any variation in the price registered. The leading supplier companies have been presenting price lists with increases in the order of 20% to 30% to the supermarkets.