Argentina

Market overview

On 25 April, the Government announced the extension of the nationwide lockdown until 10 May. The Government is also signalling moving the country to a more flexible lockdown, with gradual lifting of restrictions. The government is consulting on and considering allowing some industries to resume activity, albeit under strict safety protocols and monitoring.

For more information on doing business in Argentina and Latin America, visit myNZTE - our free online portal for curated, in-depth information and guidance. 


Economy and trade

The International Monetary Fund (IMF) has forecasted that Argentina's GDP will contract by at least 5.7% this year (2020) due to the spread of COVID-19.

Argentina was already in the midst of a two-year recession. GDP dropped by 2.2% in 2019. During a currency crisis in 2018, the Mauricio Macri government tapped the IMF for the largest credit-line in the Fund's history, worth some US$57 billion. The country has received US$44 billion to date.

In March, the Alberto Fernandez government authorised a debt restructuring process for more than US$68 billion owed to private bondholders.

On 16 April, the Argentinian government asked bondholders to accept a cut of 62% on bond interest, worth US$37.9 billion, and 5.4% on debt capital, worth another US$3.6 billion. It is also seeking a waiver on payments until 2023.

That same week President Alberto Fernández stated that Argentina was in a "kind of virtual default". Bondholders have largely dismissed the debt restructuring plan as inadequate.

Consumer prices rose faster than expected in March with an increase of 3.3%, the first increase in four months, on the back of the lockdown and increasing food prices.

After the relaxation of essential services in quarantine, it is estimated that 25% of establishments are operating normally.

Supply chain, logistics & freight

Aerolineas Argentinas has undertaken cargo flights from Buenos Aires to Shanghai return, with a stopover in Auckland. The focus of these flights has been to secure medical supplies. The airline announced it will schedule more of these flights through to 8 May.

Government support

Employment Protection and Salary Reduction Schemes

As the economic climate in Argentina continues to deteriorate, there are growing calls for the Government to support businesses in response to the COVID-19 crisis. Most initiatives have targeted low-income workers.

The government announced a new package of measures to help businesses and workers. The package comprises of:

  • A supplement payment to the salary of private sector workers.

  • The postponement or reduction of up to 95% in the payment of employers' contributions to the Argentine Integrated Social Security System.

  • Private sector workers will receive an allowance equivalent to 50% of the net salary corresponding to the month of February this year.

  • The granting of zero-rate credit on up to 150,000 pesos to people who adhere to the Simplified Scheme for Small Taxpayers and to self-employed workers.

The measures may be extended until 30 June and Productive Development Minister, Matías Kulfas, estimated that "80 percent [of private-sector workers] would be receiving half or more of their April wages" from the state.These moves take the Government's assistance to 3% of GDP to date as of 20 April

To have access to these benefits, there must be evidence of:

  • economic activities that have been ''critically affected";

  • a significant percentage of employees who cannot provide services, and

  • a substantial reduction in sales after 20 March 2020.

Other additional measures:

  • Postponement of instalments on bank loans with them being added to the end of the loan.

  • Protection from the disconnection of power, water, internet and gas for delayed payment.

Argentina's national trade union federation and largest manufacturing business association have agreed to cap wage cuts at 25% of net remuneration. This response has come about as the unions become more concerned of potential layoffs and job losses as businesses struggle through the COVID-19 crisis.


Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in Argentina.

Agriculture

China is Argentina's second-biggest export destination and the outbreak is already hitting trade. For example, 75% of Argentina's beef exports go to China and its value has dropped 33% from December 2019 to January 2020.

Reports suggest that Argentina's fruit exports will suffer as two of its biggest destination markets, Brazil and Russia, have faced significant devaluation of their currencies.

Domestic demand for fruits and vegetables increased during the country's quarantine. Potatoes, carrots and oranges all registered an increase in values.

The governments of Argentina and Brazil are in negotiations to release water from the Itaipu dam — on the border between countries — where low levels affect Argentine agricultural exports equivalent to US$20 billion (NZ$33.59 billion) per year. The low water levels impair the agribusiness sector's ability to export produce from their river ports. This slows down operations and will have a financial impact on the sector.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.