The Covid-19 pandemic is generating a deep economic contraction in most of the world’s economies. Indeed, according to estimates by the International Monetary Fund (IMF), the global economy will contract three percent this year, which will be the biggest decline since 1929.
Argentina will not be the exception and the consequences of the pandemic are being felt with intensity, although with clear differences between the sectors.
According to a report by the Ministry of Productive Development of the Nation, in relation to the Work and Production Assistance Program (ATP), there are some branches where the average turnover has been maintained or has even risen (such as commerce in supermarkets or the drug production).
While in others there has been a drastic collapse (such as in hotels and restaurants or in services related to leisure, both with nominal year-on-year drops of more than 50 percent.
But when the year-on-year change takes into account the median (the central value), the numbers are even more serious.
In the period between March 12 and April 12, the median variation in nominal turnover shows the hotels and restaurants sector as the most affected, with a drop of 70.4 percent.
The artistic, cultural and leisure services sector, 68.7 percent and construction with 58.3 percent.
The commercial and repair sector, which concentrates the largest number of employees with 1,129 million, reflects a negative year-on-year median variation of 52.7 percent. The manufacturing industry, with the second largest number of employees (1,126 million people) has a 51.9 percent retraction.
Out of a total of 18 branches analyzed, only two show a positive year-on-year median variation in the period analyzed: electricity and gas, with 14.7 percent and finance with 5.7 percent.
Agriculture and fishing, for example, despite being essential activities, has a retraction in billing of 26 percent.
Nobody is saved
This deep contraction is also having an impact on branches that, a priori, had been considered as relatively little affected: for being exempt from quarantine, or for having a high potential for teleworking).
“However, the first sectoral billing data collected by the Federal Public Revenue Administration (Afip) show that there is a significant percentage of companies in these branches that, although they are in operating conditions to produce, have decreased their activity as a result of a retraction of demand, “says the report.
In this group, the Ministry of Productive Development identifies 30 branches, to which it presents its interannual variation under two modalities: on the one hand, the average of the branch, and on the other the quartile one. In the latter case, what is shown is that 25 percent of the firms in the branch billed below a certain threshold.
For example, the average year-on-year billing for legal services fell between March 12 and April 12, nominal 10.8 percent, but 25 percent of the firms in the worst performing sector fell billing more than 87 , 5 percent.
Hence it follows that there are many branches, so far not included in those eligible by the ATP, due to the fact that they are either exempt from quarantine or have a high percentage of teleworking, where a notorious percentage of companies are suffering nominal drops in the billing, specifies the report of the productive development portfolio.
These include, for example, those linked to construction (even linked to public works), to the so-called liberal professions (such as notary and legal services), computing (such as data processing), communication (such as related to the production and operation of TV), security and cleaning, or the food and beverage trade (such as kiosks).
In conclusion, the official report warns that the seriousness of the situation has led to multiple sectors, which were initially considered to be relatively “immune” to the pandemic, are also being affected.
In other words, what the first billing data show is that being exempt from quarantine or having a high potential for teleworking does not guarantee that companies can operate relatively normally.
“In order to preserve organizational capacities and quality employment, it is recommended to expand the list of potentially beneficiary sectors of the ATP,” the report concludes.
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