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ECONOMY | 25-06-2020 00:59

Double whammy of virus and recession forces closures in the capital

According to a survey by the Federation of Commerce and Industry of Buenos Aires, at least 18 percent of the 110,000 businesses in the capital have shut down since the coronavirus began.

After stuttering through two years of recession and three months of grim coronavirus lockdown, many businesses in the capital have had enough and are closing their doors.

"I made the decision to auction off the contents and with the capital that comes from the sale, pay the staff and get rid of the business," Ricardo Klausner told AFP at the door of his restaurant Latekla. "The quarantine gave me time to mourn and today I actually feel very relieved" 

Workers were taking out crates of glasses and crockery, chairs and an industrial kneading machine from the restaurant Klausner operated for 26 years in downtown Buenos Aires, employing seven people.

"We had one of the worst Christmases in history in terms of consumption. The summer was also very bad and then we started with the pandemic. Once the coronavirus ends, the crisis will continue. People cook at home, save, take care of their money, because they don't know what the future holds for them," Klausner said.

According to a survey by the Federation of Commerce and Industry of Buenos Aires (FECOBA), at least 18 percent of the 110,000 businesses in the capital have shut down since the coronavirus began.

Hotels, gyms, car wash services and hairdressers have yet to be given permission to open up, and restaurants have only been authorised for deliveries, which has reduced their profits by 25 percent, according to FECOBA.

"By the time it is decided to resume activity, 25 to 35 percent of businesses will have disappeared, leaving a string of unemployed, having been made defunct by the state because it was impossible to pay taxes," said Fabian Castillo, FECOBA's president.

Desolate nights

The streets around Plaza Cortazar in Palermo Viejo, in the heart of the capital, look desolate these nights. 

The trendy bars and restaurants that used to overflow with customers now have their blinds down and there is little traffic.

For Santiago Olivera, who owned the Bad Toro Bar for nine years, it was impossible to go on.

"The costs of this place were very high and we are coming from two years of fairly bad consumption. Three months without making any money was the last straw." 

Olivera pointed out that because it was closed, he was only charged half the rent. "But we are still getting tax and service bills as if we were open. On top of that, a government decree prohibited us from reducing or suspending employees, which is why we find ourselves closed for three months and with a full complement of staff."

Five other businesses in his street have decided against reopening, he said.

Argentina's economy has been limping through recession since 2018, exacerbated this year by the effects of the coronavirus pandemic. Authorities estimate GDP will fall 6.5 percent, while private estimates put it closer to 9.5 percent.

The government is currently locked in complex negotiations on restructuring US$66 billion of its debt, which soared to US$324 billion overall last year – the equivalent of around 90 percent of GDP. 

Around 35 percent of its 44 million people live below the poverty line, with that figure thought to worsening as the pandemic takes hold.

– TIMES/AFP

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