Economic realities post-coronavirus

[FallenAngel]

What are people's viewpoint as far as the economic impact of the Coronavirus on Argentina? I think that it will be quite large and exasperate the current ongoing ecnomic crisis in Argentina. Here are some examples:

• Small business collapse - many businesses in argentina were already stressed due to the ongoing economic crisis. The weeks long quarantine likely is going to kill a large number of businesses as they will not be able to meet upcoming liabilities with their now non-existent cashflow.
• Tourism - accounting for 3-4% of GDP and 12% of buenos aires GDP the impact due to less travel is obvious. Tourism is completely shutdown for X months and will likely have a downshift in total tourism for a couple years, IMO. Especially with the coming increase in crime.
• Agriculture - 9% of Argentina GDP. Largely comprised of soy. It is likely that soy demand will soften as a result of people substituting pork for vegetables. A large portion of Argentina agricultural demand was China purchasing soy to feed pigs. China's economy has deteroriated significantly since. Experiencing a 13% reduction in industrial output and 20% reduction in retail sales. Millions laid off. It is likely this will effect their agricultural purchases from Argentina ongoing
• Other major exports - vehicles is a large export. Expect this to go down. Vehicles were already trending down all over the world, but coronavirus fears has caused demand to freefall worldwide. Oil export, for obvious reasons, is now a dead industry in argentina.

The government will obviously have to do some type of stimulus measure. It is likely any said measure will exasperate the peso depreciation. Already Argentina was having difficulty paying back their existing dollar debt.

I think at this point it is obvious Argentina will largely default on it's debt though that was likely even pre-corona. However, due to the "historic nature" of the "emergency" I can see Argentina resorting to extreme actions to fund it's stimulus. Some action may be forced conversion of the dollars to pesos in bank accounts as it did before to defaulting on peso backed short-term bonds at banks people hold.

This crisis will require "unity" and "sacrifice from those with means", so policies that effect the rich chetos probably won't be too unpopular. Contrary to good economics, I fully expect Argentina to start raising taxes. Too bad the taxes won't improve policing much because crime will guarantee climb.

It goes without saying that real estate will be going lower. These are some of my viewpoints. What viewpoints do others have?

 

[TheDonald]

In my opinion, the countries with the bleakest futures post-cv19 are, in order: Iran, Venezuela and Argentina. These countries have no ability to borrow to stabilize their economic systems. They all suffer from high inflation, low productivity and inept political systems. A crisis that kneecaps their economies by 25% will take a decade to recover from. In Argentina's case, Big Al, with a nod to CK, will crank up the press and pour newly printed money into the economy. This will set back Argentina's inflation goals by a minimum of 2 years.

Aerolineas lost almost $600MUS in 2019. This operating deficit was made up by "the state," which really means Argentine taxpayers. That deficit will easily surpass $1BUS in 2020 and may reach $1.5BUS. Much of that must be paid in dollars. This will all have to come from Argentine taxpayers.

If Argentina turns to China for loans and/or infrastructure projects, then all hope for a better Argentina is lost.

 

[sergio]

What are people's viewpoint as far as the economic impact of the Coronavirus on Argentina? I think that it will be quite large and exasperate the current ongoing ecnomic crisis in Argentina. Here are some examples:

• Small business collapse - many businesses in argentina were already stressed due to the ongoing economic crisis. The weeks long quarantine likely is going to kill a large number of businesses as they will not be able to meet upcoming liabilities with their now non-existent cashflow.
• Tourism - accounting for 3-4% of GDP and 12% of buenos aires GDP the impact due to less travel is obvious. Tourism is completely shutdown for X months and will likely have a downshift in total tourism for a couple years, IMO. Especially with the coming increase in crime.
• Agriculture - 9% of Argentina GDP. Largely comprised of soy. It is likely that soy demand will soften as a result of people substituting pork for vegetables. A large portion of Argentina agricultural demand was China purchasing soy to feed pigs. China's economy has deteroriated significantly since. Experiencing a 13% reduction in industrial output and 20% reduction in retail sales. Millions laid off. It is likely this will effect their agricultural purchases from Argentina ongoing
• Other major exports - vehicles is a large export. Expect this to go down. Vehicles were already trending down all over the world, but coronavirus fears has caused demand to freefall worldwide. Oil export, for obvious reasons, is now a dead industry in argentina.

The government will obviously have to do some type of stimulus measure. It is likely any said measure will exasperate the peso depreciation. Already Argentina was having difficulty paying back their existing dollar debt.

I think at this point it is obvious Argentina will largely default on it's debt though that was likely even pre-corona. However, due to the "historic nature" of the "emergency" I can see Argentina resorting to extreme actions to fund it's stimulus. Some action may be forced conversion of the dollars to pesos in bank accounts as it did before to defaulting on peso backed short-term bonds at banks people hold.

This crisis will require "unity" and "sacrifice from those with means", so policies that effect the rich chetos probably won't be too unpopular. Contrary to good economics, I fully expect Argentina to start raising taxes. Too bad the taxes won't improve policing much because crime will guarantee climb.

It goes without saying that real estate will be going lower. These are some of my viewpoints. What viewpoints do others have?

You are right. The developed countries are going to take years to recover so there will be fewer people in a position to travel. Tourism in Argentina is going to be severely affected for a long time. As for police, they don't control crime as it is.

 

[jblaze5779]

If Argentina turns to China for loans and/or infrastructure projects, then all hope for a better Argentina is lost.

China is like a meth dealer. The first one is free, the rest will cost you.

 

[ventanilla]

China is like a meth dealer. The first one is free, the rest will cost you.

The USA supported dictatorships here that killed 30,000, I think China is a better option than that.

 

[rickulivi]

What are people's viewpoint as far as the economic impact of the Coronavirus on Argentina? I think that it will be quite large and exasperate the current ongoing ecnomic crisis in Argentina. Here are some examples:

• Small business collapse - many businesses in argentina were already stressed due to the ongoing economic crisis. The weeks long quarantine likely is going to kill a large number of businesses as they will not be able to meet upcoming liabilities with their now non-existent cashflow.
• Tourism - accounting for 3-4% of GDP and 12% of buenos aires GDP the impact due to less travel is obvious. Tourism is completely shutdown for X months and will likely have a downshift in total tourism for a couple years, IMO. Especially with the coming increase in crime.
• Agriculture - 9% of Argentina GDP. Largely comprised of soy. It is likely that soy demand will soften as a result of people substituting pork for vegetables. A large portion of Argentina agricultural demand was China purchasing soy to feed pigs. China's economy has deteroriated significantly since. Experiencing a 13% reduction in industrial output and 20% reduction in retail sales. Millions laid off. It is likely this will effect their agricultural purchases from Argentina ongoing
• Other major exports - vehicles is a large export. Expect this to go down. Vehicles were already trending down all over the world, but coronavirus fears has caused demand to freefall worldwide. Oil export, for obvious reasons, is now a dead industry in argentina.

The government will obviously have to do some type of stimulus measure. It is likely any said measure will exasperate the peso depreciation. Already Argentina was having difficulty paying back their existing dollar debt.

I think at this point it is obvious Argentina will largely default on it's debt though that was likely even pre-corona. However, due to the "historic nature" of the "emergency" I can see Argentina resorting to extreme actions to fund it's stimulus. Some action may be forced conversion of the dollars to pesos in bank accounts as it did before to defaulting on peso backed short-term bonds at banks people hold.

This crisis will require "unity" and "sacrifice from those with means", so policies that effect the rich chetos probably won't be too unpopular. Contrary to good economics, I fully expect Argentina to start raising taxes. Too bad the taxes won't improve policing much because crime will guarantee climb.

It goes without saying that real estate will be going lower. These are some of my viewpoints. What viewpoints do others have?

I agree with your statements. What worries me is the consequence of the money the government is printing to give it away. All the things you outlined above will cause a severe drop in tax collections, while expenses are shooting up like crazy. Although I never lived in the years when Hitler took power in Germany, the conditions in that country seem similar to the one's in Argentina currently. Enormous unemployment, hyperinflation, and social unrest. The latter is the one thing missing in Argentina.

Finally, president Fernandez clearly identified his priorities today. He said that the choice was saving lives or the economy, and he preferred lives. Trump has a different point of view, and so does the Mexican president. I debate this myself, and I don't know who is right.

I hope I am wrong, and some miracle will occur, but certainly the immediate future looks terrible, financially wise.

 

[Weyland]

The USA supported dictatorships here that killed 30,000, I think China is a better option than that.

How about they don't sell out their country to either? They employ the same tactics as the IMF. Make a loan you know the country can't pay back and then extract your pound of flesh.

You can be sure that Argentina will default on the Chinese loan they get and then their ports will be under Chinese control for the next 99 years. Look at what happened in Sri Lanka.

 

[sergio]

In my opinion, the countries with the bleakest futures post-cv19 are, in order: Iran, Venezuela and Argentina. These countries have no ability to borrow to stabilize their economic systems. They all suffer from high inflation, low productivity and inept political systems. A crisis that kneecaps their economies by 25% will take a decade to recover from. In Argentina's case, Big Al, with a nod to CK, will crank up the press and pour newly printed money into the economy. This will set back Argentina's inflation goals by a minimum of 2 years.

Aerolineas lost almost $600MUS in 2019. This operating deficit was made up by "the state," which really means Argentine taxpayers. That deficit will easily surpass $1BUS in 2020 and may reach $1.5BUS. Much of that must be paid in dollars. This will all have to come from Argentine taxpayers.

If Argentina turns to China for loans and/or infrastructure projects, then all hope for a better Argentina is lost.

I don't see China being like the IMF, allowing restructuring. They are demanding and will want something in return. I don't believe the IMF or the bondholders are anywhere near as intimidating as the Chinese.

 

[jblaze5779]

Ya'll ever been to Africa? Looks more like china now.... I'm sure Argentina will appreciate the money but they won't appreciate all the Chinese labor brought into the country to complete projects.

Sometimes I wonder how that would work with the unions here.

 

[EL_TIGRE_de_Tigre]

What are people's viewpoint as far as the economic impact of the Coronavirus on Argentina? I think that it will be quite large and exasperate the current ongoing ecnomic crisis in Argentina. Here are some examples:

• Small business collapse - many businesses in argentina were already stressed due to the ongoing economic crisis. The weeks long quarantine likely is going to kill a large number of businesses as they will not be able to meet upcoming liabilities with their now non-existent cashflow.
• Tourism - accounting for 3-4% of GDP and 12% of buenos aires GDP the impact due to less travel is obvious. Tourism is completely shutdown for X months and will likely have a downshift in total tourism for a couple years, IMO. Especially with the coming increase in crime.
• Agriculture - 9% of Argentina GDP. Largely comprised of soy. It is likely that soy demand will soften as a result of people substituting pork for vegetables. A large portion of Argentina agricultural demand was China purchasing soy to feed pigs. China's economy has deteroriated significantly since. Experiencing a 13% reduction in industrial output and 20% reduction in retail sales. Millions laid off. It is likely this will effect their agricultural purchases from Argentina ongoing
• Other major exports - vehicles is a large export. Expect this to go down. Vehicles were already trending down all over the world, but coronavirus fears has caused demand to freefall worldwide. Oil export, for obvious reasons, is now a dead industry in argentina.

The government will obviously have to do some type of stimulus measure. It is likely any said measure will exasperate the peso depreciation. Already Argentina was having difficulty paying back their existing dollar debt.

I think at this point it is obvious Argentina will largely default on it's debt though that was likely even pre-corona. However, due to the "historic nature" of the "emergency" I can see Argentina resorting to extreme actions to fund it's stimulus. Some action may be forced conversion of the dollars to pesos in bank accounts as it did before to defaulting on peso backed short-term bonds at banks people hold.

This crisis will require "unity" and "sacrifice from those with means", so policies that effect the rich chetos probably won't be too unpopular. Contrary to good economics, I fully expect Argentina to start raising taxes. Too bad the taxes won't improve policing much because crime will guarantee climb.

It goes without saying that real estate will be going lower. These are some of my viewpoints. What viewpoints do others have?

Argentina (And quite a few of the other weak countries ...) is going to experience a lost decade. There is no way The Argentine Government can stimulate their economy given the condition it was in prior to the coronavirus. Given that, the lost decade is going to grind families / people down to almost nothing and without mercy. To the point that the crisis in 2001 will be viewed as a kinder event on the whole.

In the course of a lost decade, the poverty line will re adjust well above the estimated 40% mark. I personally think that dividing line will be greater than 60% of the population perhaps as much as 65% to 70%. Argentines of means or opportunity, will be looking to escape to other countries to make better lives for themselves. Those who are trapped will suffer greatly.

As for foreigners / tourists ... EXTERNAL CURRENCIES will rule the day. Argentina is going on sale for quite some time.

I see another default and an inept attempt to right the ship. ULTIMATE FAILURE and a LOT OF PAIN is coming.

The ARS should weaken considerably from here. My estimate is 90 to 110 per U$D by the end of 2020.