Stark economic data underlines pandemic's impact on Argentina's economy

Economic activity contracted by 12.9 percent in the first half of 2020, compared to the same period of 2019, underlining the impact of the coronavirus pandemic.

However, new data revealed by the INDEC national statistics bureau also showed that the economy showed early signs of recovery in June after the strict Covid-19 lockdown brought trade to a dramatic halt by April.

Economic activity rebounded 7.4 percent in June from May, below economists expectations of a 10 percent monthly jump. 

Only financial services (up 4.8 percent) and utilities (namely electricity, gas and water, up 3.6 percent) showed year-on-year growth.

The most severe contractions were felt in community, social and personal services activities (down 63.2 percent), hotels and restaurants (down 62.7 percent) and fishing (down 53.6 percent). 

Economic activity was down 12.3 percent in June from the previous year, INDEC said, although that was an improvement on April (down 26 percent) and May (down 20.5 percent). 

"The improvement was mainly due to a greater relaxation of restrictions on movement, mainly in industry and commerce, especially in the provinces less affected by covid-19," the bureau said in its report.

It's the second straight month of improving data, though the economy is far from out of the woods. Argentina's government tightened its lockdown again in July after loosening some quarantine restrictions in June.

President Alberto Fernández also hasn't laid out a broad plan to get the economy out of a recession stretching into its third year, nor the end of a quarantine that began March 20 and currently lasts until August 30.

Argentina's economy is forecast to contract 12.5 percent ​​this year according to private estimates, on pace for the worst one-year decline on record, along with inflation above 40 percent and double-digit unemployment. 

The economy has been in recession since 2018 and GDP contracted by 2.5 percent last year.

– TIMES/AFP/BLOOMBERG