Used to crisis, Argentines pivot to survive COVID economic blow

Used to crisis, Argentines pivot to survive COVID economic blow

Buenos Aires, Argentina – Former chef turned taxi driver Carolina Ascona is in the midst of another reinvention.

The 44-year old single mother is learning to sew miniature tents for children as well as picnic blankets she plans to hawk from the roadside on the outskirts of the Argentine capital.

“It’s the only thing I can come up with right now,” she says of her latest tent venture. “There is no work. With the age that I have, it is very hard.”

It is Ascona’s second attempt to establish a solid income footing as the financial ground beneath her buckles and bends to the coronavirus pandemic and its wrath.

After Argentina went into lockdown in March, and the airports she depended on for taxi customers closed, she created a new business – purchasing cheeses for resale and delivering them to customers around Buenos Aires.

It’s the only thing I can come up with right now

Carolina Ascona, chef turned taxi driver and soon, a vendor of homemade tents and blankets

But that work soon dried up as people’s orders shrank alongside the South American nation’s economy.

Argentina recorded its most severe economic contraction in 16 years in the three months ending June, when the economy shrank 19.1 percent compared with the same period a year earlier

The country is in the third year of recession, which means its people were sinking under high unemployment, skyrocketing inflation, and soaring poverty even before the pandemic dealt an even harsher blow.

But for Argentines used to lurching from one economic crisis to the next, pivoting to find new sources of income has become such a well-honed skill, it is known as “el rebusque”. Translated loosely as ”the rummage” – the term captures a nimble spirit that works the margins in order to survive.

We’re among the countries whose economies fell the most

Gabriel Rubinstein, a former governor of the Argentine Central Bank

Record economic plunge

Argentina has been under some form of quarantine since March 19. Its fast lockdown to safeguard against COVID-19 was lauded by a citizenry terrified by the scenes emanating from Europe and helped to bolster the public healthcare system.

But with restrictions still in place six months later, for many Argentines, the scales are tipping away from fear of the virus towards fear of economic ruin. This, even as the number of new cases shows no sign of slowing down, and with cases branching out across the country, not only in urban centres as had been the case in the first half of the crisis.

Some 840,000 Argentinians have been infected with COVID-19 while more than 22,000 have lost their lives to the disease, according to Johns Hopkins data.

People wearing protective masks stand in line outside a Banco Provincia bank branch in the financial district of Buenos Aires, Argentina [File: Erica Canepa/Bloomberg]The government has extended a slew of measures intended to help them weather the financial ravages of the pandemic, including continuing direct cash payments to the poor and self-employed, a moratorium on evictions, and throwing a financial lifeline to companies so they do not fire their employees.

Still, tens of thousands of businesses have shut down for good, and people who could not pay their rent ended up on the street, despite the evictions prohibition.

Unemployment hit 13.1 percent in the three months ending June, according to the National Institute of Statistics and Census in Argentina. Interannual inflation in August hit 40.7 percent – fed by a slide in the Argentine peso. Poverty in the first quarter sat at 40 percent – a number the Catholic University of Argentina says is by now at 46-47 percent.

The Argentine government was able to restructure $65bn in foreign debt in September, buying itself some crucial fiscal breathing room with foreign creditors. But the need to print pesos in order to bankroll economic measures to survive the pandemic has contributed to growing uncertainty, economists say.

The reaction has been a predictable one – Argentines have been exchanging their pesos for the more reliable United States dollar, which is commonly used to save here by those who are able.

Argentina places limits on how much foreign currency individuals can buy.

People wearing protective masks enter and leave a bus in Buenos Aires, Argentina [File: Erica Canepa/Bloomberg]According to official figures, 3.9 million Argentines bought the permissible amount of $200 in July. In August, it was about five million.

In an attempt to shore up depleting foreign exchange reserves, the country’s Central Bank imposed stricter currency control measures in September. In lockstep, the main unofficial exchange rate – known as the dollar blue – shot up, to around 145 pesos per US dollar, nearly double the official exchange rate.

‘A great deal of uncertainty’

“We’re among the countries whose economies fell the most [in the world in the second quarter], and we might be among the group that will see the slowest growth,” said Gabriel Rubinstein, a former governor of the Argentine Central Bank and head of the Buenos Aires firm Gabriel Rubinstein & Associates.

“There is a great deal of uncertainty. The country risk level, despite the debt restructuring, is very high. It’s among the worst in the emergent countries, if not the worst, along with Angola and a few other countries. So the situation is very bad. And in a political context that clouds things, that makes everything seem worse.”

The country risk level, despite the debt restructuring, is very high

Gabriel Rubinstein, a former governor of the Argentine Central Bank

The government has since tweaked rules around the movement of the greenback, and created incentives for Argentines to save in pesos. In a radio interview this week, Economy Minister Martin Guzman described the capital control rationale.

“The first condition to invest is stability and the alternative of doing nothing would result in an exchange rate jump. These are not measures that make us happy but they do allow us to protect the exchange rate situation, which is a pillar of stability,” he said.

‘I’m learning’

For people like Ascona, the burden of an economy that swings from crisis to crisis is engraved on her recent history.

She lives in Ezeiza, on the outskirts of Buenos Aires. She has a daughter who is six and a son who is 19. They live in the home that she grew up in, with her mother.

After she lost her job as a chef at the age of 40, it took her nine months to find work, in part, she says, because most of the offers were for people under the age of 35. She turned to taxi driving out of an airport and was able to make ends meet until the pandemic decimated air travel.

Now, her family relies on donated groceries from social organisations, and her daughter’s school, and an emergency benefit from the government which amounts to 10,000 pesos ($130) every two months.

“Today because of the needs that we’re facing in my house, and everywhere actually, my son has to go out and work in construction,” she said. “Today, for example, he had a situation where he almost cut his hand with a saw. He’s 19, and he has to do a job he isn’t qualified for, because there is no other option today. If he cuts his hand, he has that mutilation for the rest of his life.”

Ascona also worries her children will get used to relying on a donated bag of groceries in order to survive.

“I don’t want that for them. I don’t want anyone to manage their quality of life,” she said.

Gustavo Ponce de Leon has also reinvented himself, twice, during the pandemic. The 35-year-old plumber and gas operator had twelve people working for him on a construction site but lost all of that work in one fell swoop with the pandemic.

He started a vegetable stand with a sack of potatoes, that stretched into a wider offering that lasted a few months, but it became unsustainable and he had to close.

A couple of weeks ago, he opened a corner store in the garage of the house that he rents, with tables to sit at out front, and a foosball table. Like the grocery store before it, he named it El Rebusque.

“I have a bike lane in front of my house, so everyone passes by here on their way to the park,” said the father of a blended family of four, who lives in the Buenos Aires neighbourhood of Villa Urquiza.

In between the odd plumbing job, he is learning how to navigate the ferocious world of price hunting and inflation.

“I do what I have to do. Look for the best prices. Today for example I went to a hotdog factory because it’s a lot cheaper,” he said. “Every week the prices change, sometimes a little, sometimes a lot, but I’m learning.”