Itaú BBA - ARGENTINA – GDP collapsed in 2Q20 on negative effects of lockdowns

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ARGENTINA – GDP collapsed in 2Q20 on negative effects of lockdowns

September 22, 2020

We forecast a GDP contraction of 12.7% this year

Argentina’s GDP posted a record decline in 2Q20, amid strict lockdowns to contain the spread of COVID-19. Output declined by 19.1% yoy, extending the 5.4% decline registered in 1Q20. On a sequential basis, GDP contracted by 16.2% qoq/sa, after posting an upwardly revised decline of 4.2% in the previous quarter and generating a statistical carryover of -16.2% for 2020.



Domestic demand plummeted in 2Q20, following the implementation of social distancing measures. Domestic demand (excluding inventories) fell by 23.3% yoy and 19.0 qoq/sa. Gross fixed investment dropped by 38.4% yoy in the quarter, while private consumption retreated by 22.3% and public consumption declined by 10.1% yoy. Imports fell by 30.1% yoy, while exports decreased by 11.7% yoy, affected by a decline in industrial exports. At the margin, gross fixed investment declined by 27.3% qoq/sa, followed by a decline of 18.9% in private consumption and 10.4% in public consumption. External demand had a positive contribution at the margin, as exports fell by 7.9% qoq/sa vs. a 19.1% drop in imports.



We forecast a GDP contraction of 12.7% this year, even with some gradual economic recovery in 2H20, as a consequence of prolonged mobility restrictions and the tightening of exchange rate controls.

Juan Carlos Barboza
Diego Ciongo


 



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