1

ENGLISH WEEK

ANGIE PAOLA BAEZ MORALES

DANNA RODRIGUEZ

LUISA LOPEZ

JUAN DAVID VARGAS

UNIVERSIDAD SERGIO ARBOLEDA

Macroeconomía I

Magister en Desarrollo Económico

Bogotá
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2021

ENGLISH WEEK

Presentado por:

ANGIE PAOLA BAEZ MORALES

DANNA RODRIGUEZ

LUISA LOPEZ

JUAN DAVID VARGAS

Presentado a:

LEONARDO MORA CAMPO

UNIVERSIDAD SERGIO ARBOLEDA

Macroeconomía I

Magister en Desarrollo Económico

Bogotá

2021
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ARGENTINA

Argentina's economy in 2020 contracted for the third consecutive year due to COVID-19 in
sectors such as: private consumption, investment and exports, therefore as an expectation for
the end of the year it is that GDP will decrease by 10, 5%. In this economic framework,
inflation fell to 43.5% year-on-year. And in 2021, the economy is expected to recover 4.9%,
thanks to the gradual reopening of the sectors affected by the pandemic. Resulting in an
increase in labor income, and private consumption, generating a greater demand in exports,
taking into account that this consideration depends on the progress of the pandemic, and the
availability of vaccines for it. Regarding fiscal policy, it had an expansionary bias in 2020, a
key part of the economic policy in 2020 was the exchange of debt in foreign currency with
private creditors, which allowed to restore 99% of the liabilities, which involves a reduction
in the interest rate, debt relief in the next years, in addition, the Argentine government began
negotiations with the International Monetary Fund (IMF) to modify the conditions of the loan
requested in 2018, under which the country faces approximately US $ 45 billion of capital
maturing in the next five years.

Monetary policy in 2020 was expansionary based on the measures implemented to face the
crisis, expanding the supply of credit lines to the private sector, including for working capital
in micro, small, and medium enterprises, the production of basic necessities, financing of
technological equipment for teleworking, loans for infrastructure of industrial parks, and
housing rehabilitation, as well as reducing the political interest rate, as well as the Central
Bank provided financial assistance, and took measures to stabilize the foreign exchange
market.

Economic activity contracted 12.6% year-on-year in the first half of 2020, due to reductions
in investment (-28.7% year-on-year), private consumption (-14.5%), exports (-8 , 7%) and the
public. consumption (-5.5%) in the context of the COVID-19 pandemic.
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BRAZIL

In 2020, the coronavirus disease (COVID-19) pandemic negatively affected the Brazilian
economy and cost a large number of lives. In the third quarter of 2020, the effects of the
policies to combat COVID-19 began to be felt, with a GDP growth of 7.7% compared to the
second quarter and a cumulative fall of the product of 5.0% in the anus. Within the service
sector, the strongest impact of the pandemic was on food services outside the home, personal
services, tourism, and air transport. Family consumption expanded 7.6% in the third quarter
after falling 11.3% in the second (quarter-on-quarter). Investment and public spending
decreased and exports of goods and services, after registering an expansion of 1.6% in the
second quarter according to the same measurement, Thanks to commodity sales, they fell
2.1% in the third. The fiscal accounts of the federal government registered their largest
deficits and increased indebtedness given that real expenses and tax loss increased in relation
to the 10 months of 2019.

In August 2020, the central bank reduced the base interest rate (SELIC) from 4.5% to 2.0%
per year, the lowest nominal rate since the Real Plan was introduced in July 1994. The fall in
production and consumption produced Due to the pandemic, with its deflationary effects, it
brought the inflation rate below the target, and the decisions of the central banks were guided
by the objective of stimulating spending and by the evolution of asset purchases.

The capital and financial account was influenced by greater instability in foreign exchange
flows since the real devalued 44.2% against the dollar in the 12 months to October 2020, as
the deficit and lower interest rates, they pushed up the price of the dollar in Brazil and other
emerging markets. However, in November, the result of the presidential elections in the
United States and the perspective that vaccines against COVID-19, underpinned investment
in the Brazilian exchange market, with a rise of 7.6% in the value of the real that month.

The devaluation of the currency had a direct impact on the domestic prices of basic products
such as food and fuel. the consumer price index (IPCA) changed by just 4.3% in the period.
The total number of employed persons fell by 8.0 million to 54.8 million, and the number of
domestic workers fell by 26.5% in the same period, to 4.6 million, 71.5% of them in
conditions informal work
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HAITI

In 2020, the Haitian economy is suffering the effects of a double shock: one corresponding to
supply and the other to demand. The first is due to the decline in the agriculture, services and
transport sectors, while the second is the result of the decrease in remittances and mobility
restrictions. In addition to the fact that it was estimated that in 2020 due to COVID-19, the
Haitian economy would suffer a reduction of 3.0% in gross domestic product due to the
effects of the crisis caused by the COVID-19 pandemic and the persistence of complex
internal conditions that led to a 1.7% GDP contraction in 2019 where it was the first negative
variation. The most important macroeconomic indicators revealed a general deterioration: a
high inflation rate, which was 20.8% year-on-year in December 2019 and 17.0% per year on
average, associated with a marked depreciation of the gourde (34 , 0%), as well as a widening
of the fiscal deficit (which was close to 8.0% of GDP, compared to 6.5% in 2018). The
current account deficit fell significantly and went from representing 3.9% of GDP in 2018 to
representing 1.5% of this in 2019, thanks to the increase in exports of goods (11.4%) and
remittances (6.9%), but mainly due to the decrease in imports (-6.4%); However, long before
the COVID-19 pandemic paralyzed the world economy, the United Nations had calculated
that 40% of Haitians would need emergency humanitarian aid this year since the economy of
this country has been declining day after day. According to projections made in October 2019
which establish that as of March 2020 around three million inhabitants of the country would
be in a situation of severe food insufficiency, the step prior to the famine in the classification
used by the UN.

COMPARISON

Argentina, Brazil and Haiti are countries which have suffered a great impact thanks to Covid-
19. These countries have had a negative GDP, the Argentine GDP fell 10.5%, the Brazilian
GDP fell 5.3% and the GDP of Haiti 3.0%.
Covid-19 has been very shocking in these 3 economies, many workers from different sectors
lost their jobs thanks to the virus, in Argentina throughout the year their unemployment
increased to 13.1%, in Brazil more than 10 million people They were fired from their jobs.
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Despite the fact that Haiti does not have official figures, it is estimated that its population has
an unemployment rate of 23% year-on-year.

In Argentina the assistance and emergency program for work and production (ATP). It also
implemented a subsidy to cover the financial cost of workers' autonomous loans and
emergency family income (IFE). The government included a bonus for workers in the health
and safety system, a bonus for lower pensions, an additional payment for beneficiaries of the
Universal Child Allowance (AUH), Pregnancy Subsidy for social services Protection, We
Make Future, Complementary Social Salary and Food Programs, an increase in the budgetary
allocation for capital spending on infrastructure, education and tourism works; and a financial
assistance program for provinces and municipalities.

In Brazil, the federal government implemented actions and programs to protect personal and
corporate income and guarantee business continuity, in terms of income transfers, the
COVID-19 emergency assistance program has reached 66 million people, with payments for
280 billion reais, or about 3.9% of GDP, a female head of household who would have been
receiving 190 reais (US $ 38) per month under the Bolsa Familia program received assistance
in the first five months at 1,200 reais ( almost US $ 240). The unemployed received
assistance to make up for the drop in their income resulting from the loss of 10 million jobs in
the first four months of the pandemic. For the poorest parts of the population, the monthly
assistance is 600 reais.

In Haiti, a government subsidy was added to cover part of the income of maquila workers
during the end of April. Central government spending on health and social programs to face
the COVID-19 pandemic involved extraordinary outlays of US $ 95 million (8% of total
spending), which were recorded as investment spending. In particular, the social programs for
cash transfer and food distribution, implemented mainly by the Economic and Social
Assistance Fund (FAES). The financial authorities also incurred expenses to regularize
10,000 teachers and made extraordinary disbursements to incentivize (bonuses) to health,
educational and police personnel.
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The central bank was fundamental in the economic reactivation and took measures in the 3
countries. In Argentina, the central bank provided financial assistance to the national treasury
so that it could face the additional expenses derived from the fiscal package, aggravated by
the fall in income and the process of restructuring the public debt. The credit expansion
included lines of credit for working capital for micro, small and medium-sized enterprises
(MIPYMES); a line of credit for the production of basic necessities; financing of
technological equipment necessary for teleworking; loans for infrastructure of industrial
parks; the relaunch of the procurer mortgage line of credit for the construction and
rehabilitation of houses, and the renewal of the Now 12 program for credit card purchases at
lower-than-market interest rates. As it also ordered the postponement of the payment of the
debts that the beneficiaries had with the National Social Security Administration (ANSES)
and froze the payments of the mortgage loans. This financing from the central bank to the
National Treasury was channeled through temporary advances and profit transfers. In
addition, the central bank took measures to stabilize the foreign exchange market. These
included a policy of gradually increasing the official exchange rate. As a result of strong
capital outflows from the private sector, in September.

In Brazil, the central bank, in addition to financing the balance of payments, international
resources played an important role in the central bank's actions in the Brazilian exchange
market. The central bank has also supported the expansion of credit in the financial system,
which supports an increase of more than 37%, equivalent to 1.7% of GDP, in credit to micro,
small and medium-sized companies compared to 2019. and credit measures, resources of
around 12% of GDP were allocated to the Covid-19 response. To shore up public policies to
face the Covid-19 crisis, in the first months of the year Congress approved a constitutional
amendment suspending the application of fiscal rules in 2020, for example, the restriction of
not allowing a real increase in primary spending and changing certain mechanisms so that the
central bank could, if necessary, support the financial system, companies and the Treasury
through direct loans or purchases of securities. On the monetary policy front, in August 2020
the central bank reduced the base interest rate (SELIC) from 4.5% to 2.0% per annum, the
lowest nominal rate since the Real Plan was introduced in July 1994.
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In Haiti, the Central Bank adopted an increase in the limits of transactions carried out through
mobile payment services and commissions on interbank transfers were waived. Likewise, it
implemented measures aimed at supporting credit to the private sector, such as the granting
of an initial temporary moratorium of 90 days, then extended until December 2020, on the
payment of interest, without penalty. The BRH (Banque de la République d'Haïti) adopted a
set of measures to mitigate the impact of the pandemic. Those aimed at increasing liquidity
stand out, as well as others aimed at supporting credit to the private sector, such as those that
favor the granting of a temporary 90-day moratorium on the payment of interest, without
penalty. Monetary financing from the central bank (Banque de la République d'Haïti (BRH))
had a considerable rebound and represented almost three times the ceiling that had been
stipulated in 2019. An exception measure was also adopted for the benefit of the industrial
sector maquiladora, according to which it only had to close for a month. Added to this was a
government subsidy intended to cover part of the income of the maquila workers during the
end of April.

Argentina and Brazil had a surplus and also had a deficit, throughout the year in which the
virus has been experienced, the country counted negatively on its economy, it only counted
on deficits. The current account of the balance of payments in Argentina registered a surplus
of 0.8% of GDP. It is explained by an increase in the merchandise trade surplus (which grew
to 2.3% of GDP), together with a reduction in deficits in trade in services and in the transfer
account and current income, The improvement in the balance Merchandise trade reflected a
drop in imports (-23.5%), which exceeded the 10.9% drop in exports. Imports, classified by
economic use, fell in a generalized way, due to reductions in both prices (-4.2%) and volumes
(-19.9%), as a result of the sharp contraction in activity. The services trade deficit narrowed
in the first half of the year, largely due to a 55% year-on-year drop in travel expenses, as a
result of circulation restrictions due to the health crisis. Meanwhile, the deficit in the current
income and transfers account was reduced to 1.3% of GDP, due to the suspension of interest
payments on the public debt, as part of the debt restructuring process. The capital and
financial account registered a deficit of 1.1% of GDP in the first half of 2020, mainly due to
capital outflows from the private sector. This represented 1.2% of GDP. 1% of GDP in the
first half of 2020, mainly due to capital outflows from the private sector. This represented
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1.2% of GDP. 1% of GDP in the first half of 2020, mainly due to capital outflows from the
private sector. This represented 1.2% of GDP.

In the Brazilian external sector, the pandemic has impacted the country's balance of
payments. The goods trade surplus stood at US $ 51 billion in November 2020, an increase of
21.2% compared to the same period in 2019, and exceeded the 2019 total of US $ 48 billion.
The main factor in this was a sharp drop in imports (-14.7%), especially fuels (-39.9%).
Exports fell 7.4%, given Brazil's poor performance. Manufacturing exports (-13.5%), while
agricultural exports increased 6.8% in value terms. The services deficit fell 42% in the first
10 months of 2020 year-on-year. The deficit in travel services fell from US $ 9.8 billion in
2019 to US $ 2.1 billion in 2020, and in transportation services from US $ 5 billion to US $
2.5 billion. Net outflows of foreign currency in payments of external interest and remittances
of profits and dividends decreased (-17% and -37%, respectively), and the outflows for these
concepts fell to US $ 13.3 billion in the first 10 months of 2020. As a result, the current
account deficit of the balance of payments fell from $ 42.9 billion at the end of 2019 to $ 7.6
billion between January and October 2020 (from -2.8% to -0.65% of the GDP).
In Haiti, the current account showed a surplus of 10.5% of GDP, as the sharp drop in exports
(-25%) and imports (-26%) was offset by sustained remittance flows, which increased by
20% year-on-year.

Conclusion.

Argentina invested much more in health by taking measures so that the population was not so
affected in this country by the virus, such as the launch of the "El Barrio Cuida al Barrio"
program, which seeks to establish mechanisms to protect health and food for vulnerable
segments of the population; Likewise, in Haiti, the government has invested in social and
health programs to face the pandemic, in particular, social programs for money transfers and
food distribution. However, Haiti has chosen more to recover a little more economically since
they have suffered for several consecutive years with a large deficit and a negative result in
their GDP. that it seeks to establish mechanisms for the protection of health and food for
vulnerable segments of the population; Likewise, in Haiti, the government has invested in
social and health programs to face the pandemic, in particular, social programs for money
transfers and food distribution. However, Haiti has chosen more to recover a little more
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economically since they have suffered for several consecutive years with a large deficit and a
negative result in their GDP. that it seeks to establish mechanisms for the protection of health
and food for vulnerable segments of the population; Likewise, in Haiti, the government has
invested in social and health programs to face the pandemic, in particular, social programs for
money transfers and food distribution. However, Haiti has chosen more to recover a little
more economically since they have suffered for several consecutive years with a large deficit
and a negative result in their GDP.